tim222 - 7:37 pm on Mar 18, 2010 (gmt 0)
The system makes advertisers bid an amount that would best what would otherwise be made via a click as measured by the average impressions between clicks and the cost per click. It's not difficult to calculate. The calculation is in your control panel. That number you see in your control panel is what CPM ad buyers are bidding against.
If one thinks about it, the idea that Google would give away your inventory to make less money doesn't make sense at all.
This makes the most sense. Google isn't going to serve an ad with dismal eCPM when they can serve a better one that makes more money for everyone. This is just the way business works... advertisers who are willing to bid higher aren't going to be sitting on the sidelines. But when there's ample inventory then the "bottom feeder" ads are going to get served once in awhile.