Every time your ad is shown, the keyword is given a rank number. The lower the number the higher the ad rank. Google calculates ad rank by a very simple formula:
(maximum bid) X (quality score)
This means that it’s possible to pay less than a competitor but appear at a higher rank for multiple keywords. This also means that just because you can pay more than your competitor does not mean your ad will be displayed higher in the results. You can do this for a little while but it takes management time and it’s not a good long-term strategy. You might as well put more time into increasing your quality score and using the extra money towards another Ad Campaign or as Profit!
Do you need assistance understanding your quality score or want help improving your quality scores? View our list of SEO Ad Words Services.