Lets take a look at the frame work for search results, as you can see in the picture at the bottom of the post, a great deal of the screen from a typical search result is comprised of paid advertisements. The usual places consist of the top of the page, the upper right bar, and the bottom of the page. The ads at the top and the bottom of the results consist of a yellow border notifying the, now educated, searchers that it is in fact an advertisement. These advertisements are considered “paid” and the typical searches that are not advertisements are considered “organic” searches.
Now to address the question, “why is it so competitive?” Well, according to a study done by Search Engine Watch, 85 percent of the clicks from search results are organic vs. 15 percent paid. They went on to say that 53 percent of the organic clicks go to the top result, 15% to the second, 9% to the third, and 6% for the fourth. The trend continues. What makes this information useful is the fact that these clicks are converted to dollars and the jump of 53 to 15 percent can calculate to a significant difference in revenue for the respective companies.
The underlying point here is that it pays to be at the top of the search results and it stings to come in second and third. In an industry where metrics are compiled for every click and possible variation it is wise to invest in good ads and develop good links. Simply put, if you fail you could be out of a job in a hurry.