This video below gives a clear insight into how Google thinks about the Adwords bidding system. Google’s Adwords system is a paid search marketing system and delivers the ads that you see on the right hand side of a search results page (amongst other places). This system can bring you traffic to a page, but can get very expensive if you do not work on the quality score of the target page.
The video is presented by Google’s Chief Economist and goes into how Google balances the various interests of the three parties that participate in the Adwords process. One of the points described well in the video is the importance of relevance and click through rate the ad has on the cost per click.
This is a useful video if you are new to Google Adwords.