Does bidding more increase click quality? We know bidding more will increase traffic, but by what margin does the quality increase?
Not really. Being on top of the ads will increase traffic, but if your ad isn't good you will get lots of worthless clicks. Make sure your ad is well written and tells people exactly what they will get if they click on your ad and of course have a good website helps.
It's a good question. In my experience, when it comes to bidding on (allowed) brand names, being ranked high hurts your traffic's quality. My colleagues suggested that this is due to users who are actually seeking customer service from the bidded brand. I wonder if it's "keyword-dependent" also for non-brand keywords...
Bidding higher does NOT help quality. Sure, your CTR is higher simply because you are ranking higher and people tend to click more often on ads at the top of the page. But all search engines take this into account. Quality scores are normalized on a position basis. So if your QS is 6 in 10th position, it will be 6 in first.
Being in the top positions seems to show a marginal improvement in subsequent conversions. It's a question of whether paying more is justified. As a rule brand marketers tend to go for the top positions of major terms, whilst affiliate marketers are happy to feed from the bottom where cost per click is much lower.
Your ad is the determining factor on quality of clicks. Make your target small and you will make more money. Make sure they know what they are clicking on.. if you're selling something let them know its to buy...not to look