Understanding Quality Score and Ad Rank
Higher quality ads can lead to lower prices and better ad positions.
To give you a better understanding of how ad quality works on AdWords, we'll go over Quality Score and Ad Rank. The Quality Scorereported in your account is an estimate of the quality of your ads and landing pages triggered by that keyword in auctions throughout the day. Ad Rank determines the order in which your ad shows up on the page (also known as ad position).
The components of Quality Score are expected clickthrough rate (CTR), ad relevance, and landing page experience. Each keyword gets a Quality Score on a scale from 1 to 10, where 1 is the lowest score and 10 is the highest.
Why does your ad quality matter? The more relevant your ads and landing pages are to the user, the more likely it is that you'll have a higher Quality Score and benefit from having higher quality components of your Ad Rank, such as a higher ad position or lower cost-per-click (CPC).
Keep in mind that Quality Score is intended to give you a general sense of the quality of your ads, but doesn't take into account any auction-time factors, such as someone's actual search terms, type of device, language preference, location, or the time of day.
Ad Rank, however, does take into account auction-time factors and determines where your ad appears on the page or whether it appears at all. Every time one of your ads competes in the auction, AdWords calculates your Ad Rank using your bid amount, the components of Quality Score (expected CTR, ad relevance, and landing page experience), and the expected impact of extensions and other ad formats.
Does this mean that a higher bid can always lead to a higher ad position? No. Even if your competition has higher bids than yours, you can still win a higher ad position at a lower price by using highly relevant keywords, ads, and ad extensions.