I just found you can make your headline is longer by adding dot point after first description sentence. It happens when your Adword ads appear on the left of results.
You can see here: Example keyword "visa vietnam" in Google India _www.google.co.in/#hl=en&source=hp&biw=1366&bih=667&q=visa+vietnam&aq=f&aqi=g10&aql=&oq=&fp=3c3d50756fc9bebb. But I think you can apply all Google.
This was announced recently on the adwords blog. http://adwords.blogspot.com/2011/02/longer-headlines-for-select-ads-on.html
Technically, it's not a longer title but simply tacking the first description line to the title. But you can made it look like a longer title with careful wording. It works best (higher click rates) if, when put together, it reads like a title and flows naturally. The second description line is also important in that flow and higher rates. Psharma, you don't "make" such an ad. Your ad still has to follow existing rules. You must show up above the SERPs which means having a minimum QS of 7. You can't bid your way up there if your QS is lower. As mentioned, the first description line must end with a punctuation, something I've almost always done so it's not a problem. I do see lots of ads however not doing so and these are the ones noticing a lower position lately.
I learned something new today, thanks for sharing I think i am going to try this new method once i got my adwords voucher
Most likely, it's because they look more like the SERPs, meaning that CTR goes up because people aren't aware that they're ads and click them. I guess it might also have something to do with the fact that the longer, bolder title is more eye catching. There could be a number of factors involved, and as with anything it's also how you use the space that counts.
Yes, higher CTR in higher position. But also higher conversion rates because, as you say, many don't realize they are clicking on an ad. Also, many won't click on the right hand side ads for whatever reason (they know they are ads, they don't notice them as much). Those get good conversions too, usually, but not as good as those above the SERPs. I think once people find what they are looking for (from the top positions), they are more likely to buy. They don't waste time checking out the others, even if an ad on the side seemingly has a better deal. The text has to catch the eye too. Ad text can help improve conversions. As you say, it's how you use the space. Just putting words together is not enough.