On slashdot I saw this article from Cringely mentioned, describing a real life experiment with Google AdWords and the relation between price per word and placement.

The actual algorithm calculating where to place the ad on the search page listing is of course not revealed by Google. But through a test of two parallel websites with exactly the same content and ad, it seems that Google seems to penalize more than what is “normal” if you choose to drop your price per word.

Interesting and a bit scary that we actually have little idea what’s going on behind the search result curtains.