How Google Ranks Ads

How Google Ranks Ads
Google AdWords auction insights into why the highest bidder doesn't always win.

Ever wonder how Google ranks ads in its realtime ad Auction? What about why your ad is showing in a low position or not showing at all?

Ad Diagnostics and Preview Tool Use to See Ad and Position by Keyword
Ad Diagnostics and Preview Tool – See how Google Ranks Ads relative to competition

In short, Google wants to show more useful ads to its users in a higher position. Why? Because relevant ads to search queries benefits user experience and retention. Advertisers are happy as they get clicks from users with relevant searches. When users and advertisers are happy, Google (and it’s shareholders) are happy. Everyone wins.

Watch the following short (~8 min) educational video from Google to learn how Google ranks ads in the search results to improve your ads position while lowering your cost per click.

One of the most compelling parts of the AdWords System is how it works: the “Ad Auction.” So let’s break down precisely how Google ranks ads in the search results.

3 Factors Determining How Google Ranks Ads

The three factors that Google uses to rank ads include:

Google AdWords auction insights
Google AdWords auctions insights – learn why the highest bidder doesn’t always win!


Google AdWords is an internet advertising service which operates on a “pay-per-click” basis. This means that although your ad may show to a user following a Google search, you only pay when a user clicks on your ad. The bid is an amount specified by the advertiser about how much they are willing to pay for a relevant click.

Quality Score

While the bid plays a role in where your ad will show on a search results page. It isn’t everything. Google wants to make its users as happy as possible with their experience using the search engine. It takes into account that relevancy and quality of ads are important to consider, not just how much an advertiser is willing to pay up-front to have their ad appear at the top of search results.

Google’s solution to this conundrum? The concept of quality score. An ad’s quality score is made up of several components. These include:

  1. An ad’s relevancy to the search query,
  2. The feedback through clicks that Google receives from users who have seen and clicked on the ad,
  3. The quality and usefulness of the ad’s landing page.

The goal is to make your quality score as high as possible. A higher quality score will result in higher ad positioning and lower overall costs per click.

Format Impact

Make sure to use all the ad extensions that your ad is eligible for. Three ad extensions can benefit all search advertising campaigns include sitelink extensions, callout extensions and structured snippets. Additional ad extensions such as review extensions or location extensions may also be applicable.

 Ad Rank x Bid = Position

Ad Rank is numerical value calculated by evaluating the combination of bid, quality score and format impact. Google uses Ad Rank  Google to determine which ads show up in the search results and the order of those ads.

The Ad Rank formula is proprietary to Google so the details of the calculation are unknown. Suffice it to say that winning an ad position requires a combination of knowing how much to bid for position and writing  high quality text ads that draw relevant clicks sending users to relevant landing pages.

Pay Only $.01 More Win Higher Position

Once a search query is inputted to Google, the search engine instantly auctions off the various page positions to different competing ads factoring in Ad Rank and Bid. The advertiser with the highest combination of ad rank and bid will be placed ahead of the second highest, and so on.

What’s great about this process is that if a user actually clicks on your ad, you don’t have to pay your full declared max bid, just a penny more than the next highest ranked advertiser would have paid. Therefore, if your ad is showed in the first position and you bid $1.00 for a click, and the second position advertiser bid $0.90, you only pay $0.91 for that click!

Beat Out Competitors While Lowering Your Click Costs

Because there are millions of advertisers bidding on keywords to showcase their products and services on Google simultaneously, only the most relevant ads will show for each search. That’s why Ad Rank and Bid matter, not only for position, but for costs.

Advertisers must also consider their daily ad budget to ensure that their ad shows every time a Google users performs a relevant query. A key benefit of AdWords provides advertisers more budgetary control than traditional advertising such as print, radio and TV.

Want Help Improving Your Ad Rank?

We can help determine why your ad is showing in a low position or not showing at all while working to improve your ad rank and lower your cost per click.

To be contacted by a eBiz ROI Certified Search Specialist, just fill out the short form below or call: +1 (518) 557-3502. Email:



    Ricky Noel is a Google AdWords Certified AdWords Professional, a proud employee of eBiz, ROI. as well as a full-time student at SUNY Geneseo, where he studies English, Education, and Theater. Ricky got into the internet marketing industry when his father, Rick, introduced him to Google AdWords and showed him the possibilities online advertising represented for business owners and web-users alike. Ricky began working with eBiz in the summer of 2016, between senior year of highschool and shipping off to college. Since then, he has worked remotely from school thanks to the wonders of Google Hangouts and high speed internet connectivity. His passions include reading, writing creatively and analytically, and performing in plays and musicals. He is also an experienced Dungeons and Dragons aficionado, holds Abraham Lincoln and George R.R. Martin among his personal heroes, and is really excited to help businesses grow and spread their message online.

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