What is Ad Rank? Ad rank 2025 calculation formula
If you work in the field of marketing, you certainly understand the importance of Ad Rank in reaching potential customers. A high-ranking ad position significantly increases the likelihood of campaign success.
In this article, we’ll provide you with fundamental information about Ad Rank—what it is and the latest Ad Rank formula in 2025.
1. What is Ad Rank?
Ad Rank is a term used in advertising, referring to the position of an ad on Google. The ad’s rank is determined by Google’s algorithms, based on how Google evaluates the associated web page.
For beginners, it’s often misunderstood that only SEO is influenced by algorithms. However, this is incomplete—every ad you see under the “sponsored” section has already been calculated and ranked by Google’s algorithms.
After evaluating the ad, Google will set the cost that the advertiser must pay when a customer clicks on the ad. The better the position, the higher the cost will likely be.
Besides position, Ad Rank is influenced by various factors such as bid amount, auction timing, ad format, customer search trends, and more. Notably, Ad Rank costs are automatically adjusted after each auction. If your ad meets the requirements, you’ll have the opportunity to appear in top positions on Google.
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2. Ad Rank Formula 2025
Google’s algorithm changes constantly, which means the Ad Rank formula is also adjusted over time. The latest formula for Ad Rank is based on five indicators:
Ad Rank = CPC Bid × Quality Score × Ad Rank Threshold × Context of Search × Ad Extensions & Format
These indicators include:
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Ad Rank: The final position where the ad appears
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CPC Bid: The cost-per-click bid—the maximum you’re willing to pay for a click
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Quality Score: A measure based on the relevance of keywords in your ad
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Ad Rank Threshold: The minimum bid required for your ad to appear in certain positions
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Context of Search: Includes keyword quality, search time, user location, device used, etc.
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Ad Extensions & Format: The expected impact of additional ad features and formats (like sitelinks, callouts, etc.)
While multiple factors contribute to the final Ad Rank, the two most crucial ones are CPC Bid and Quality Score. The other three are determined and automatically calculated by Google.
So, the simplified 2022 Ad Rank formula to remember is:
Ad Rank = CPC Bid × Quality Score
3. The Impact of Ad Rank on Advertising
3.1 Higher Competition in Advertising
To lower your CPC, you can use Ad Extensions. Lowering your CPC may increase the CPC for others. If your competitors are also using ad extensions, your CPC could rise as well.
3.2 Use Ad Extensions Effectively
Ad Extensions increase the chances of your ad being successful. Therefore, take full advantage of all relevant ad extensions available.
3.3 Higher Average CPC
If many advertisers use Ad Extensions, the average CPC will inevitably increase. This is because higher Ad Ranks generally lead to higher CPCs.
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3.4 Impact on SEO
Everyone wants a high Ad Rank on the SERPs, which can push down organic SEO results. However, in the long run, SEO remains a more sustainable and cost-effective strategy.
3.5 Not Ideal for Small Businesses
While small businesses are making efforts to reach potential customers through advertising, many overlook the use of Ad Extensions—unlike larger enterprises.
Meanwhile, Google continually introduces new Ad Extensions, and they play a critical role in evaluating an ad’s performance. This makes it particularly challenging for small businesses to compete.
Conclusion
Through this article, we’ve provided a comprehensive explanation of what Ad Rank is and the latest Ad Rank formula in 2025. We wish you success in your advertising campaigns!
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