If all three campaigns above contain the same keywords, will the campaign with more specific targeting always win? Will users from GB searching in English always see only the 3rd campaign's ads, users from Australia searching in English the 2nd campaign's ads and all other users the 1st campaign's ads?
So for Australia, campaigns 1 & 2 will compete.
In GB, all 3 will compete.
As you're now competing against your own ads, it often drives up the price in the formula - hence, the largest problem with geo targeting.
Hopefully G will add a feature that if two campaigns compete, you can choose which is the default and it will ignore the other one.
Ok, so competing campaigns (or ad groups) are resolved by CPC. However, which one -- max. CPC or real CPC?
When the same keyword is used in competing campaigns or Ad Groups, the AdWords system will defer to the case with the highest Maximum CPC.
If the Max CPC is the same in all cases, then the system defers to the case where the keyword in question has the highest CTR.
AWA