Google will rank an AdWords ad based on the maximum CPC, the click through rate (CTR) and the relevancy of the ad text. Google prefers relevant and well-targeted AdWords ads. Google determines ad placement using the value formula: CPC x CTR. The ad is placed higher as the valuation rises. It’s possible for an advertiser to have a high rank position with a low CPC if the CTR makes the value to Google higher than other ads with a higher CPC.
Google requires a minimum CTR in order to protect the AdWords program value for its users. The CTR of all AdWords ads are monitored by Google on a continuous basis. An under-performing AdWords ad may be disabled by Google if the CTR does not improve.
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