AndyA - 2:40 pm on Apr 29, 2010 (gmt 0)
i think we've got to remember that these ads are probably making google more money, so we are stuck with them. because it allows them to put ads on sites where they'd never normally get a look in, which burns through the advertisers budget quicker.
before, they might just be competing to appear on 100 sites, but now they might have a shot of appearing on thousands. the individual click rate for any one publisher might drop as a result, but the clicks are likely racking up for google a lot quicker.
The problem with this theory is: as AdSense continues to perform poorly for publishers, they will cut back on impressions because AS is no longer worth the real estate. Those sites where they'd never get a look in likely will convert more poorly than the 100 other sites, which means less value for the advertiser.
Google may make more money in the short term, but this is not a long term plan to increase profits.