Recently Hal Varian, Google's Chief Economist, posted a video on YouTube where he explained exactly how the Google Ad Auction works.
In this video he demystified the relationship between how quality score, clickthru rate and on page relevancy affect your ppc costs and your ad position. A lot of this information is well known, but to hear it from Google themselves is better than any other source, and he teaches it in a way that makes it very easy to understand.
This information should make it a lot easier for you to understand how to manage your Google adwords campaigns.
I'm interested to hear what people think of this video, please comment below after watching it.