I have been juggling around with this for a while now. As a web surfer I do tend to ignore the first ads taht appear just above the "natural search results". If i do have the urge to look at the ads, my eyes stroll over to the middle section of that right-hand column first. So this is me. How do others see it? Maybe if we can have a little poll, we can all better understand whether its worth spending that much extra to be in top position. Is the top position really the best?
You get the most clicks if you appear at the top. But each click costs more. Deciding where to appear is a tradeoff between getting as many clicks (and hence conversions) as possible, and making as much money as possible from as conversion. It's different for every business (different Quality Scores, different conversion rates, different margins and product ranges etc), so you have to find the most profitable position for you. It's different for every campaign, and generally every Adgroup or even keyword...
As a PPC Account Manager, I'm not really representative of the typical visitor (my mum didn't even know that there was a difference between the adverts until I explained). If I'm looking to buy something, I click on the PPC adverts - but unlike most people, I read them all. If I'm looking for information, I click on the SEO listings. As I say though, that's just me...
PPC managers only have a biased view. For me, I know paid spots are only going to be selling a product. So when I want to buy something I dont mind clicking the text ads, but I usually open all the text ad spots to compare all the results. If I just want information usually I go natural and a mix of paid spots to compare. So again, it biased because we know what those paid spots represent and we know what to expect out of them