Well, your service is free and AdWords isn't free, so it will come at a cost to you. In that sense it cannot be cost effective. However, chances are that you can lower the cost of signup by optimizing your AdWords campaign. Detailed suggestions cannot be provided here, but here is the gist of it:

1. Improve the quality scores for your best-converting keywords
2. Redistribute the budget to your best-converting keywords (i.e. turn off the keywords that perform less well)

Unless you have already mined all the possibilities of this approach, it will go a long way toward improving the value you get from AdWords.

What you need before hand is what is each signup worth to you. If it is worth more than 86 cents per signup, then your ad is profitable

Else try content network where the CPC will be about half of what you are spending on search network..But remember, the quality of visitors from content network will be different from search network.

if it's a free resource then don't use adwords as it will cost you far more than you will get in return.

Obviously, each signup is valuable to me... even though I'm not charging for the service. I will eventually advertise on my site.

I think I should probably concentrate on SEO? I've seen services that say 'guaranteed top 3 rankings' or you continue to get the service for free until you do. Can anybody comment or recommend such a service?