(2)
There are two basic components to how an AdWords ad is ranked in the sponsored section of the search results page. Cost per click (the bid) and click through rate, those two numbers make up your "rank number" or the position of your PPC ad.
A well moderated WebmasterWorld thread named Changes in Ranking Formula discusses a change made to the CTR (Click Through Rate). Basically, the thread reports that Google now looks at each individual ad copy's CTR. So instead of simply looking at an overall keywords CTR, they break down the keyword into your ad copy groups and use the CTR x the CPC to rank that specific AdWords ad.
There are some strong reactions to this change at the WebmasterWorld thread. As you can imagine, some like it and some dont.
