Ans: the natural result draws fewer clicks because folks click the Adword. The natural result then drops in placement.
Now, what is the best thing for an advertiser (lacking infinite $$) to do?
Ans: drop the Adword, give those $$ to Overture and hope Yahoo speeds up their Inktomi lauch.
When I ask the average Joe or Jane how they think Google ranks sites, they inevitably give a variation of "counting clicks" as one of 2-3 answers (when pressed.) If memory serves, this was the algo used by HotBot a long time ago.
Does Google count clicks?
(imo) and many others, Google does NOT count click data from adwords to adjust your natural listings, or vice versa.
You are quite correct Shak. One does not affect the other in any way.
mmdesign, if I read your post correctly you are concerned that AdWords 'takes' visits to your site away from those that might have occurred through the "natural" results.
Although I am not formally trained in the nuances of search results, I am all but certain that the number of site visits is not an important factor in determining rank.
There is a lot of info on the subject of search results on the Google site by the way. I hope it is OK for me to post the link to that info here, which is:
[google.com...]
Mods, please edit if this is inappropriate.
BTW, as I mentioned in another post on Friday, I'll be here on WebmasterWorld very minimally this week, due to other commitments. Back as usual on 2/2.
AWA