Count me as someone who has never bought something via a Google paid search link. I have bought something via a facebook ad though...

As consumers get more 'savvy' (aware that ads are displaying first) they will be less likely to click these ads.

One reason why I believe consumption is more and more likely to be based on our social graph (recommendations + referrals) rather than search.

And here, inherently, is the issue with this model of advertisement. IMO, if a user can be too "savvy" to participate, it isn't a good advertisement model. Anything that relies on lack of knowledge or "savviness" isn't very solid.

This is mere conjecture.

Not yet but I have increasingly been clicking on AdWords ads so I'm sure it's just a matter of time. The guy in marketing at the small company I'm working for spends $20k a day on AdWords campaigns and he tells me it's extremely lucrative if you know what you're doing so yes obviously a lot of people click on those ads. The affiliate program we have pays out six figures annually to dozens of affiliates who reinvest the bulk of that into their AdWords campaigns. Lots of people click those ads. The HN crowd, by and large, does not.

$20k a day on Adwords?

Yes. They seem to have it down to a science. Way beyond my area of expertise.

I have never, but have actually made profits before from affiliate marketing using Google AdWords. I've never been inspired to click on any paid advertisements, but IMO, it definitely does work considering how many people obviously click on those ads.

I don't recall ever buying via a Google paid link, but there are a handful of sites that have made a multiple of their investment back via showing me ads.

I click on them frequently, and buy from them frequently. Often times the ads are more relevant than the organic search results.