If I test a keyword I am bidding on my ad always is in #1 position. Yet, when looking at my stats it says average position is 4.2 - This has not always been the case though, it used to show roughly 1.4 Any ideas?
Could it be that you're using broad match for your keyword and looking at your ranking only through exact match? (The differences are explained here.) For example, if your keyword is widgets it could be ranked #1 for a search for widgets...but it could be ranked lower for red widgets or blue widgets because other advertisers have bid higher for those keywords.