one reason that i can think of that will cause them to "prefer" higher CTR:
an article that has only a partial information and set of facts about the related subject, which causes more people to click on the ads at the bottom of the article, as they've realized that in order for them to keep on researching about that certain topic, they need to read some more stuff about it in other websites.
in one sentence - giving them an incomplete information about a topic would cause them to click on the ads, and for the right reason .
agree?

i know you can always give me a counter-argument for why it sounds like google will prefer lower CTR, and even why google doesn't care at all about the CTR, so let's not go into that ..

But that is what you're getting into, If you are suggesting that a low CTR will cause Google to de-value the traffic you send them, then you must believe that they have a reason for doing so.

If I have read what you have written above correctly, Google would prefer that your site not give visitors the information they're looking for, in order to encourage them to click on ads, so Google would prefer lower quality sites in this instance?

[edited by: Yoshimi at 9:53 am (utc) on Jan. 22, 2009]

yoshimi, something like that, as sad as it may sound .
but it does make sense - google dodesn't care if I write a mediocre article so that the readers will keep on reading about the given subject on the advertisers' website.
sounds to me that in this way, they have a better chance to convert .

He already said it. In the context of being smart priced, the word "free" in your pages is not desirable.

Sorry must have missed it when I was skimming through.

Yes, it has already been speculated here on WebmasterWorld many times; the word "free" is not a word you want on an adsense site. Now we have confirmation.

But they also don't care how many people click on your ads...it sounds crazy but stay with me here;

Google pays you every time someone clicks on an ad on your page, the advertiser pays Google.

If your site is a quality site, where people find the information they need, when they click on the add they do so because the ad interests them, therefore they are more likely to convert once they reach the advertisers site. The advertiser continues to make money, enabling them to continue advertising, enabling Google to continue making money.

If your customers click on your ads out of frustration at not being able to find the info they want, they're not really interested in buying once they get to the advertisers site. The advertiser is paying, but bot seeing any ROI, so they do exactly what I am sat doing right now...they stop advertising on those sites which do not drive converting traffic. Google stops making money, because people stop paying to advertise.

Google doesn't want lots of clicks on adtexts, they want quality clicks which will ensure that people continue to pay to advertise with them. This is why when someone starts sending lots of traffic, that doesn't convert for their advertisers, they start smart pricing, which is really nothing more then offering that advertiser a discount to advertise on your site doe to the low quality of traffic, Google pass that loss of revenue on to you.

At the end of the day though, if you want to worry about CTR that is up to you, people are simply trying to provide you with information to help you make the most of what you have got, whether you take or leave it is up to you.

yoshimi, thanks for the answer, it's now beginning to make more sense :)

another thing i wanted to know - how do you guys know that youv'e been smart priced? are there any ways of knowing how much your CPC on a specific page was except for the google keyword tool ?