Well i assume google has a reason to do it This was earlier done to counter MFAs who used to generate pages and get low priced adwords or other cpc traffic and send crap traffic to the adwords adverts on his site To avoid this they needed to instil some confidence in the advertisers, and you know google they will go to any extent to please advertisers whether it be MFA or otherwise, so they invented smart pricing But i think overal conversions also depends a lot on the quality of the landing pages, google can make advertisers also liable to pay the full amount they bid if their quality score dips Imagine we make excellent websites and when visitors click the ads and go to any crap adwords landing page, they immediately hit the back button because the adwords content on the advert is not matched by the landing page Is it our fault, maybe google can help us publishers by providing us rights to give quality score to landing pages for those adverts that are displayed on our webpages (like through the google site preview tool-it can have a rating system on it from 1-5) Based on bids and quality score given by publishers the ads move up and down in the adblocks