Components of Ad Rank
Ad Rank is the value Google Ads computes to decide whether an ad shows and in what position. It combines the advertiser's bid, the ad and landing-page quality (summarized in Quality Score from expected click-through rate, ad relevance, and landing-page experience), the Ad Rank thresholds, the context of the search (device, location, time, query intent), and the expected impact of ad extensions and other formats.
Why a low bid can still win
Because quality and expected extension impact multiply into the calculation, a high-quality ad can outrank a higher-bidding competitor while paying less per click. The actual cost per click is derived from the Ad Rank of the advertiser below you divided by your own Quality Score, plus a small increment, which is why improving relevance lowers price as well as raising position. The context term means Ad Rank is recomputed at every auction, so the same ad can rank differently for different users and queries.