ColourOfSpring - 2:35 pm on Apr 15, 2013 (gmt 0)
The AdWords portion of Google is a separate group/team/whatever. So is the design team. We're talking about the organic results in this discussion, none of the others.
A SERP is a mix of organic and ads. That's what a searcher sees. That's what a searcher reacts to. You think Google don't look at the interplay between Adwords and organic? Of they course they do, because they're literally on the same page. Google will be greatly interested in the interplay between Adwords and organic listings for many reasons: usability reasons, sheer accuracy for the searcher, diversity for the searcher, and last but not least to see how Google can earn the optimal income from any given SERP without harming quality. As I presented earlier, the "win win" that Google are looking for here is giving the searcher what they want, and maximising their profits - that's the destination Google are (and have been) working toward. They're a business.
Not one search engine I can think of has ever grown, or even held on to, a large market-share of search traffic through ads that are better than their organic results, but there are a number I can think of have served ads that are better than their organic results and failed (meaning lost both money and market share).
To be no.1, you just have to be better than the rest - not necessarily YOUR best. If being "good enough" makes you a larger profit than being YOUR best, any company would simply set their dials to "good enough". If a competitor comes along and ups their game, you then up your game to make sure you stay at no.1. Look at Google Fiber - this new venture has shown that gigabit connections are commercially feasible, and what happens? The big player in this field - AT & T - suddenly up their game and match Google Fiber's specifications. Would AT & T offer gigabit connections without Google Fiber? Absolutely not. They wouldn't need to. This happens in all industries. You just have to be better than the rest. Google are NOT no.1 because they are offering the best organic results they can possibly offer - they are no.1 because they are offering better organic results than the competition.