Even though I mentioned this video on Twitter about a month ago, it definitively deserves a little more attention because of the useful information and manner in which the auction system is used to serve ads to those using the Google service.
Hal Varian (chief economist at Google) explains in a very simple manner the auction principle, the effect of Quality Score on ad positions, and the price paid by an advertiser in order to “beat” the competition (Max Bid).
If you use Google AdWords, I’d surely recommend that you spend the 9:12 minutes and take a look at this video.
