LucidSW - 6:12 pm on Mar 1, 2012 (gmt 0)
I could see where a certain percentage of people would turn to PPC if natural rankings fall. But I think that would be a very small percentage. Most SEO people I know want nothing to do with PPC, mostly having to do with "SEO is free, why pay for traffic". Admittedly, I believe most of those are affiliate marketers and this could be different for people with real businesses who view PPC more as a complement to SEO, but especially if they never could rank high organically.
The thing is, Google gets new advertisers all the time for all kinds of businesses. I don't think manipulating the organics to try to get more Adwords users would add a significantly large percentage to those numbers.
Crazy messages such as below first page bids when you're already on the first page are fairly common. It's just a matter of understanding the big picture of what's happening, the system's point of view. They are annoying, especially to clients who often ask why.