inbound - 5:27 am on Jul 3, 2011 (gmt 0)
First off, this is speculative but based on the actions of many of their business units (suggesting that changes are being made in a particular direction).
It's fair to say that AdWords is a simple solution that works well when looking at general web search. However, as a vertical-specific advertising system it's pretty poor in comparison to what Google probably wants to do.
I'm pretty sure that the verticalisation of Google search is leading us towards more specific advertising methods that apply within those "apps". I see Google wishing to "simplify" the choosing of a supplier in many verticals - a very basic version of this is Shopping; they are going to go way further than that.
What will change?
We all should know that Google is shouting from the rooftops about user experience as it tries to tackle webspam etc.
I honestly believe that Google do want to find a way to send people to sites that offer the best user experience (although their ability to do so seems limited). I also believe that they must regret some of the choices/services they made which negatively impacted on the web. Intertwined with these thoughts are how a future Google will continue to earn revenues as it gets better at finding the "right" answer.
So let's look at shopping; there are certain searches that we know mean people are more likley to be looking to buy, and if we know it so do Google. Assuming a Google user is looking to buy then there are a few metrics that Google could use to rank results:
Customer Rating Of Supplier
On-Site User Experience
Amount Paid To Google For Enhanced Position
There's also a frightening possibility, that Google gains access to credit/debit card records that allow them to infer user experience through the re-use of outlets, or otherwise, by card holders!
It's perfectly possible that Google may wish to drop suppliers from their vertical apps by applying a quality floor (which may catch some people in the crossfire) - with the expectation that only "good" suppliers are left. There's a chance that this will lead to sustainable pricing practices being easier to maintain as those throat-cutting low-price suppliers who provide little service will need to up their game or die off.
It's maybe worthwhile how your business would stack up if such measurements were being made (think about the way factors effect position in AdWords and assume that this type of system is used, so you might not need to pay the most/anything to Google if your service is good enough).
Offering a great user experience makes sense, they are more likely to use your service/products - are you doing your best on your site? I would suggest having a read of an old-but-gold book - Don't Make Me Think by Steve Krug.
Finally, I'm no advocate for Google but I would suggest that all businesses that rely to a fair degree on AdWords should be active on Google+ (and any other social networks Google can mine) when they get the chance (as long as that is in a positive way) as I'm pretty sure that Google will look favourably on those that have a dedicated following.