In a recent change to the AdWords ranking formula, AdWords representatives confirm that the previous formula which multiplied a keyword’s CTR by Max CPC, now factors in the CTR of the text ad as well. AdWords reps state:
The difference is that now, the CTR of the ad copy itself is factored in, instead of it being solely the CTR of the keyword. Which only makes sense, given that it is the quality of the keyword and the particular ad it brings up that defines relevance, for a given search.
Poster’s on WebMasterWorld have noted that they’ve seen increases in the average CPC’s of their Ad Groups as a result of the new formula, citing that altering your ad text will immediately result in CPC bump, until the new ad gains a history of a higher CTR.