I’ve seen mentioned on the Web in several places that Google AdWords is an auction, and then again in other places that it is not. Finally in Google’s own help information on AdWords they use the “Auction” term.
I have long felt that getting to position one on a keyword had an auction-factor as one could bid up the price, but in some cases never pay the actual bid price and yet still raise a keyword’s position. Now at least it is clearly in the open. Yes, Google AdWords does have an auction-like bid to position.
Remember there are additional factors that affect your keywords page position like quality score, ad text, and even landing page match and now bidding high enough to get into the auction is another one.