How online advertising prices are set
Straight from the horse’s mouth, the Official Google Blog had a succinct and easy-to-follow explanation of how keyword prices are set for PPC advertising campaigns today. I couldn’t have explained it any better myself and intend to send it along to my clients who are interested in online advertising and could use an introduction to the basic concepts
I particularly liked the way ad quality is factored in, and how it’s not a system entirely determined by who puts the highest premium on a keyword. Quality is a very difficult to thing to quantify, and Google does a very good job of making the effort to reward well-written content, not only their AdWords program, but in their search results as well.