How does the Google Ads auction work, and what is Ad Rank?

Google Ads runs an auction every time someone searches. You do not simply buy the top position with the highest bid — placement is determined by Ad Rank.

Ad Rank is calculated from:

• Your bid — the maximum you are willing to pay.
• Ad quality — expected click-through rate, ad relevance, and landing page experience, summarised for you as Quality Score.
• Ad Rank thresholds — minimum quality bars an ad must clear to show at all, or in a given position.
• Auction context — the search term, location, device, time, and what else is on the page.
• The expected impact of assets (formerly extensions) such as sitelinks and callouts.

What you actually pay is a second-price-style calculation: the minimum needed to beat the Ad Rank of the competitor below you, divided by your Quality Score — never more than your maximum bid.

The practical consequence, and the point interviewers want: a higher Quality Score lets you pay less for the same position, or hold a better position for the same money. An advertiser with a Quality Score of 8 can outrank one bidding more with a score of 4. That is why relevance work is a cost-reduction lever, not just a hygiene task.