If you visited any Google AdWords help forum in the past day or so, you would have seen dozens of complaints in the form of threads and posts from advertisers worried about their quality score. As you know, quality score is a major factor in determining the AdWords ad rank and price.
Google confirmed the bug in a couple threads, including one at the Google AdWords Help forum and one at WebmasterWorld. Google said it is just a reporting glitch and ad serving, I assume pricing and placement, have not been impacting by the reporting glitch.
The confirmation comes in two parts.
Many accounts are experiencing an unexpected drop in quality score for high performing keywords, starting around the 24th/25th of October 2010. This appears to be a reporting only issue, meaning that we display the quality score as incorrectly low in the account interface, while ad serving itself is not affected.
Please know that our engineers are looking into this as a top priority.
I will update this thread when I have further information.
The key word above was "appears," where program manager of AdWords, Adam, confirmed later on saying:
As earlier reported by AdsWordsPro, I can confirm that this issue did not impact serving (i.e., the system has been correctly computing auction-time Quality Score this entire time for ranking and pricing purposes).
This issue was limited to the reporting of Quality Score, and the fix should be live for all within the next 24 hours. For those keywords with a status of Low search volume, the fix should be live within the next few days.
Thank you all for your patience as we resolve this.
Things should be getting back to normal and you should not have been impacted, unless you made changes to your campaigns based on the reporting glitch. If so, put things back.