Preparing AdWord certification, The quality of your ads

The quality of your ads is the the quality score and Ad rank. In this video Mr. Hal Varian, Google’s chief economist, provides an in-depth and insightful overview of how the ad auction works.

Keep in mind:
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. So, you can still win a higher ad position at a lower price by using highly relevant keywords, ads and ad extensions.