A lot of internet marketers assume that the top Adsense ad on the page, whether it is on the Google search engine results or on their own sites, will give the highest click amount because they assume that the person at the top paid the most to be at the top. This is a wrong assumption. While a lot of the time the ads at the top will pay out the most because the advertiser paid the most to be on top, that is not always the case.
While Google definitely wants to make money from these ads, they also want to make sure that they are providing quality ads that meet that search term being used. They don’t want people to not want to click on Google ads because they are worried about poor quality. That is why there is a quality score in the AdWords ranking system. This quality score can help someone to rank higher (and closer to the top) even though they only bid a lower amount. This is how you make money by doing PaidPerClick marketing with AdWords, by providing the highest quality ad for the particular search queries you are advertising on. The less you bid, the more money you make from conversions, or the smaller number of conversions needed to break even.
How does this relate to SEO and niche marketing? Don’t always assume that the top ad is the one that paid the most.
Here’s an awesome video about the economics of the AdWords auctions. It’s 9 minutes long, but it is definitely worth watching all of it. if you want to skip to the heart of what I was trying to convey above, then skip to 1:54, but really, watch the whole thing.