AdWords Site Targetting - Good, Bad and Ugly for AdSense

Ever since AdWords introduced Site Targetting it seems to have a negative impact on AdSense web sites income from those of use fortunate enough to have been targetted. I've pointed out this issue a few times but Google tech support swears it brings in more income and it's a crock, a huge crock, and I have historical income data that backs up my theory on this topic.

The original premise of the AdWords content network (aka AdSense) was that Google supposedly tested ads on Google Search first to see how well the ads performed before releasing them onto the content network. This was good for publishers as supposedly only the ads that got the best click thru rates were on our web sites. Now with the advent of Site Targetting an AdWords advertiser can directly place an advertisement on our web site no matter how well it performs and the AdSense team claims it's more income because "they have to bid competitively to place the ad".

OK, let's get this clear, someone could site target my web site with an ad that says:

"THIS SITE SUCKS, DON'T CLICK THE ADS
http://www.thissitebites.com"

but because they bid competitively on that ad to get placement I'm supposedly making more money although nobody actually clicks on the ad.

Riiiiiiiight.

And I thought Google had a zero tolerance drug policy...