I noticed when searching for "www.xxx.com.au" (my web site) in Google, I got many apparent links on pages that were not really connecting to my site. (You have to use double-quotes since if I enter just www.xxx.com.au, I will be taken directly to that web page.) I eventually figured out that these 'back links' were actually based on Google AdSense ads... sometimes I could spot the ad and sometimes it wasn't there when I went to visit the page.

Now my question is, do these phantom back links contribute to PageRank, since back links are supposed to improve page ranking? Does anyone have an opinion on this?

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It does not affect your pagerank. Besides the fact that Google's search results are not crawled they area blind redirect so no PR would be transfered anyway.

Agree with stymiee it doesn't affect the PR... keep in mind that PR is quality backlinks of the site

Adwords campaign really have no effect on the page rank. They are just for increase your sale etc. Really an artificial way to visit your website. One should improve his page rank in spite of paying for this.

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