In the last step you learned that Quality Score is the software AdWords uses to determine the quality of your offering on a keyword:
Now, to determine which ads get the best position (top of the page) on a search term, AdWords uses their AdRank software.
The advertiser with the highest overall score gets the top spot.
The advertiser with the second highest score gets the second spot.
This goes on through the remaining spots on the page.
Those who don’t qualify, don’t get on the page. They get put on a waiting list of sorts, only able to appear once one of those above them drop behind or stop advertising – which can happen, depending on the settings of those on the first page.
There are some who try a remnant strategy to compete on highly-trafficked, expensive terms during off-peak hours, but it’s entirely dependent on whether or not the others on the first page ever stop. It’s not advisable, but worth testing if you have a small budget.
Here’s where the fun starts: the person almost never has to pay their full bid when their ad is clicked. Each position only ever has to pay the minimum amount of what it costs to maintain their position.
The AdRank Auction works like the old joke about the two guys hiking in the woods when they come across the bear. The first guy starts to run and the second guy says, “Training tells us to curl in a ball and remain silent if we want to live. We can’t outrun the bear because they’ll run faster than us.”
The second guy, head turned back and running, shouts back, “I don’t have to run faster than the bear. I only have to run faster than you.”
Here’s how Google describes how AdRank impacts the auction. When they discuss Quality and Format Impact (use of Ad Extensions…), they are components described in Quality Score.
In theory, as far as I know, in case of a tie, the one with the higher quality score is typically the one who gets the higher position. In case of those who have the same quality score, I have no idea. I’d assume the one who first started the bid would get it, but it’s such an innocuous situation that has no real warning or detection that the strategy, regardless, would be to improve the quality score by improving the elements.
Otherwise, no one I’ve found have written about it to date.