The ad auction is the pricing process of online advertising on a pay-per-click basis, in which there are different bids to place your ads in locations delimited by advertisers.
How the ad auction works
In online advertising services, prices are usually not fixed, but are variable depending on supply and demand. Pricing is therefore done in a PPC auction in which the price is set based on the price for which advertisers bid. If an advertiser wants to be ahead of another, they must normally bid above the current bidder.
Google Ads Auction
Each time Google Ads ad is eligible to show up in a search, it goes through the ad auction process. The auction determines whether the ad is actually displayed and in what position it will appear on the search page.
How does that auction work? When a user performs a search,the Google Ads system finds all the ads whose keywords match that search. Of all these ads, the system does not take into account those that for various reasons are not suitable. For example, all ads that target a different country or are rejected for policy violations.
All other ads can only be shown if they have a high enough ad ranking. This ad ranking is a combination of bid, ad quality, ad ranking thresholds, the context of the person’s search, and more.
If the competition bids higher than yours, you can earn a higher position at a lower price with keywords and highly relevant ads. Because the auction process is repeated for all Googlesearches, different results may appear in each auction each time depending on the competition at that time.