When allocating funds for search advertising, marketers have to plan for losses associated with unconverting clicks.  Typically, the more targeted the traffic to advertisements, the higher the conversion and better ROI.  That's why advertisers and search engines try to find new ways to get the most targeting bang for the buck.

Search Engine Watch has a great article dealing with the double-edged sword that results from trying to get the best conversion on search advertising without negatively affecting ad ranking.

Most search engines rank advertisements based on how much money they're likely to generate.  Ads that get clicked more make the search engine companies more money so those are the ads that get displayed the most.  So for them, you could almost say that mildly targeted traffic works out best.  A problem arises because the advertisers have to pay for each of those clicks.  And untargeted, "unqualified" traffic wastes advertising dollars and cuts in to ROI.  From an advertiser's perspective, ads that get clicked less frequently by customers more likely to convert work best.

As the Search Engine Watch post points out, advertisers can make their ads as clear and compelling as possible to get more converting traffic to their site.  But other advertisers, who simply want traffic, create ads that get clicked regardless of the eventual conversion.  And those ads end up getting ranked higher than the targeted, qualifying ads.

So, says Patricia Hurst, marketers must try to balance ads that drive traffic of all kinds and ads that drive good traffic.  And she suggests that search engines should somehow base their rankings on conversion… not simple click-through.  She concludes by saying that conversion is the best reference for relevance.  And since search engines claim to want to deliver ads that are most relevant, this should be their goal.

But something tells me it may be a while before we see any major shifts.  Search engines want clicks.  Clicks make them money.