Ad Rank is...complicated. It isn’t a hard concept to understand, but there are a lot of moving parts that contribute to how Ad Rank is calculated. Ad Rank by definition is a value that is used to determine where your ad shows up in a search, and if your ads are even eligible to show at all. That’s easy! The inner workings of Ad Rank is where things get tricky.
Bid Amount
The bid amount is the current bid that is placed on a keyword at the time of a search. This can be controlled manually or using an automated bid strategy. Your keyword bid is how you “pay to play” in the ad auction, but not always how you win.
Auction Time Ad Quality
This ties directly back into quality score. This means that Google Ads is looking at the expected CTR of the keyword being matched, the ad relevance of the ad being matched, and the landing page experience. In other words, a great quality score will go a long way towards a great ad rank.
Ad Rank Thresholds
The ad rank threshold is the reserve price for an ad. If you have a bid that is lower than what the threshold is, then your ad won’t show. If there are no competitors that are eligible to show then the reserve price is the price that you pay for the click. Ad rank thresholds are determined by using all of the factors in this blog, and are generated dynamically at the time of a search.
Search Context
This is where Google has really made some great improvements over the last decade. Context is important when you’re the largest search engine in the world trying to provide the most relevant and helpful results for each individual search. Things like device type, location, nature of the search term, other ads and search results on the page, and what Google lists as “other signals” are all factors that influence ad rank. An example of this would be a plumber on the east side of town having a lower ad position when the search is done on the west side of town.
Extensions and Ad formats
This is why having a variety of ad extensions is so important. Yes, they do improve CTR, but they also influence Ad Rank. Let’s say that a search is done for “how to sell my house for cash”. If you have a sitelink extension active for a “How To” page or “How It Works” page then that may influence your overall ad rank. Make lots of ad extensions that make sense and you’ll be well on your way.
That's a Ton of Stuff
Yes, yes it is. Even the ad extensions have their CTR and usefulness taken into account, which means that there are probably more underlying factors that also influence other parts of the calculation. However, even just understanding the broad strokes of ad rank (the main points above) will go a long way towards creating a better understanding of what actionable steps can be taken to compete seriously in Google Ads auction system. Bid competitively, consistently work on quality score, and use ad extensions to their fullest extent. The rest of Ad Rank will fall into line.