Advertisers who want even more traffic than their targeted keyphrases can deliver (or they can’t bid on because its out of their budget) go after huge groups of keywords which may be related to their business, but not precisely to what they are advertising. Its kind of a cross-your-fingers and wish method.

Also, arbitragers buy cheap clicks and send them elsewhere, like higher paying PPC ads. If you buy the click cheap enough its hard not to make money.

Now Google’s quality score just pushes up minimum bids pushing out guys who don’t want to only pay 5 cents a click instead of 50 cents or a dollar. Google’s revenue isn’t hurt because this quality score also pushes up the minimum bids of advertisers in non-competative keywords.

So now you see less ads, but the ads you are seeing there are being forced to pay more per click.