There is a misconception about Search Engine Marketing that whoever has the highest advertising budget will win. While targeting among the highly competitive keywords, having a larger budget can definitely be advantageous. But it is not a requirement for search engine marketing. This is because all ads have to go through this process before appearing among the search results.
The ad auction takes place every single time when someone searches for some keywords on google. Keywords to be auctioned should be wisely selected as it involves some amount of spend. After that Google will determine if the keyword you have bid on is contained in the user’s search query. Based on this your ad will appear in the ad auction.
Now the question is how can we decide whether the ad will appear in the ad auction?
Explaining this there are two main factors that Google evaluates as a part of the ad auction process the maximum amount that you have specified for the bid and the quality score of your ad.
The result of this calculation is the ad rank.