ronburk - 5:46 pm on Mar 7, 2007 (gmt 0)

Yeah, then why are so many of them (advertisers) complaining about higher priced keywords and leaving AW to go to Yahoo and elsewhere?

Because Google is continually increasing the price differentiation for both advertisers and publishers. In both cases, the winners in this price differentiation (advertisers who see lower CPC and publishers who see higher EPC) are silent, while the losers are vocal and public. If you were savvy enough to buy the cheapest ticket on a plane, you won't make many friends by standing up and announcing how little you paid relative to everybody else. Ever-increasing price differentiation is perhaps the biggest economic effect of the Internet, in all markets, everywhere.

In both cases, Google will be happy to see the losers go to other ad networks, where they will contribute to overall less effective advertising than the Google network, thus driving more of the "best" business to Google.

In both cases, there will be collateral damage, since the differentiation can only be done algorithmically, and the algorithm can never be perfect.

In both cases, there will be plenty of folks who think they are unfair victims of collateral damage when, in fact, they really need to (publisher) increase the ROI they offer advertisers or (advertiser) increase the conversion rate of their advertising copy/landing page.