How Google Ads Works in 2026: Auctions, Ad Rank and Campaign Types

#01What happens in each auction?

When someone searches, Google finds ads whose keywords, search themes or AI Max matching make them eligible. It then calculates Ad Rank for each one. Google's help page says Ad Rank is based on many factors, including your bid, ad quality, Ad Rank thresholds, the context of the search and the expected impact of assets. It runs twice: once to decide if your ad can show at all, and again to decide its position.

Two practical consequences:

• A higher bid does not guarantee a higher position. Better ads and assets can win a higher spot at a lower price.
• Your position changes from search to search, so "average position" thinking no longer works. Look at impression share and top-of-page rates instead.

#02Where does Quality Score fit?

Quality Score (1 to 10, per keyword) is built from expected CTR, ad relevance and landing page experience, each rated against other advertisers on the same searches over the last 90 days. Google states plainly that it is not an input in the ad auction and should not be aggregated or optimised as a KPI. Treat a "Below average" landing page rating as a to-do item, nothing more.

#03Which campaign type does what?

Google is moving Display campaigns into Demand Gen. From June 2026 eligible advertisers can migrate existing Display campaigns, and Google says new campaigns will later only be created in Demand Gen.

#04What changed with AI?

Three changes shape this whole track:

• AI Max for Search lets Google match queries beyond your keywords, rewrite ad text from your site and send clicks to a different page than your final URL (lesson 10).
• Ads in AI Overviews and AI Mode serve from existing campaigns, with no separate targeting (lesson 15).
• Smart Bidding sets bids per auction from signals you cannot see, so the conversions you feed it decide what it chases (lessons 3, 4 and 11).

Our view: the advertisers doing best in 2026 are not the ones with clever bid tricks. They are the ones whose conversion data reflects real revenue and whose exclusions stop the AI wasting money in obvious places.

#05How do you read an account like the auction does?

The auction runs on every search, so the useful question isn't "what is my Quality Score?" but "what does Google know about this search and my ad at this moment?". Google's Ad Rank page lists the inputs: your bid, the quality of your ads and landing page at auction time, Ad Rank thresholds, the competitiveness of the auction, the context of the search (location, device, time, the search terms, other ads and results on the page, user signals) and the expected impact of assets and other formats.

Two practical consequences follow:

• You pay to clear a threshold, not just to beat a rival. Ad Rank thresholds mean an ad can fail to show even with no competition. Low-quality ads need higher bids to reach the same position.
• Assets change your rank. Because Google estimates the impact of assets such as sitelinks and callouts, adding relevant assets can improve Ad Rank without a higher bid.

#06How does Quality Score help you diagnose?

Quality Score (1-10) is a diagnostic shown at keyword level, built from three parts: expected click-through rate, ad relevance and landing page experience. Google says it is not an input to the auction. Use it like a warning light:

#07How do you choose a campaign type?

Pick based on the job, then add campaign types one at a time so you can see what each one adds.

#08What should a new account look like on day one?

A simple, measurable structure beats a clever one. For a B2B software company with one product, a sensible start is:

1. Brand Search campaign: your brand terms, exact and phrase match.
2. Non-brand Search campaign: three to five tightly themed ad groups for problems you solve, with a Smart Bidding strategy once conversions flow.
3. Shared negative list applied to both (lesson 8).
4. Performance Max or Demand Gen later, once you have reliable primary conversions and a few weeks of Search data.

#09What edge cases catch people out?

• Brand campaigns look too good. People searching your brand would often find you anyway. Report brand and non-brand separately, always.
• Search partners. Search campaigns can show on search partner sites. Check performance by network (segment by Network) before deciding to keep it on.
• Location settings. The default "Presence or interest" option can show ads to people interested in a location, not just in it. If you sell only in one country, choose "Presence".
• Auto-applied recommendations. Auto-apply is set at account level. Review it on day one (lesson 20).

#10Worked example: Ledgerline's starting point

Ledgerline is a fictional accounts-payable software company. Details and numbers are illustrative.

Ledgerline runs one Search campaign on brand and one on "accounts payable automation" terms, plus an old Display campaign. Before touching bids, the team listed what each campaign is for, found that the Display campaign optimised to page views rather than demo requests, and paused its expansion until conversion goals were fixed in lesson 3. The Display campaign went on the list to migrate to Demand Gen (lesson 14).

Walkthrough: how Ledgerline restructured

1. Separated brand and non-brand. Brand terms moved into their own campaign with exact and phrase match. Non-brand reporting immediately showed a higher cost per demo than the blended number had suggested.
2. Checked network and location. Search partners were on, and the location setting was "Presence or interest". The team segmented by network, kept partners for now, and switched location to "Presence" because Ledgerline only sells in three countries.
3. Read Quality Score components. Two non-brand keywords had "Below average" landing page experience. Both sent traffic to the home page; they were moved to the invoice-matching feature page.
4. Wrote down the plan. Performance Max would wait until the demo conversion had been clean for a full month.

#11Try it yourself

Run this 30-minute auction check on your own account.

1. Pick your five highest-spend non-brand keywords. Add the Quality Score, Exp. CTR, Ad relevance and Landing page exp. columns.
2. For each "Below average" component, write the likely cause using the table above.
3. Segment one Search campaign by Network and compare Google Search with search partners.
4. Check the location option in each campaign's settings.
5. List each campaign by type and write one sentence on the job it does. Any campaign you can't explain is a candidate to pause or merge.

#12Quick quiz

1. Is Quality Score used in the auction?

Answer: No. Google describes Quality Score as a diagnostic tool; the auction uses real-time quality signals as part of Ad Rank.

2. Name three inputs to Ad Rank.

Answer: Any three of: your bid, ad and landing page quality at auction time, Ad Rank thresholds, auction competitiveness, the context of the search, and the expected impact of assets and formats.

3. Why should brand and non-brand be reported separately?

Answer: Brand searches are usually cheap and high-converting, so blending them hides the real cost of finding new customers.

#13What should you check before the next lesson?

• Open Ad Rank and Quality Score help pages and note what feeds each.
• List every campaign type in your account and what goal each one is meant to serve.
• Check Change history for automatically applied changes in the last 90 days.
• If you are new to paid search, read the live MentionX guide on how Google ranking influences AI answers for the organic side.

Next: Google Ads account setup checklist. Or return to the Google Ads for Marketers track.

#14Common questions

Is Quality Score used in the auction? No. Google says Quality Score is a diagnostic tool, not an input in the ad auction. Ad Rank is calculated at auction time from bid, ad quality, thresholds, context and expected asset impact.

Is AI Max a campaign type? No. AI Max for Search is a set of features you switch on inside a Search campaign. It adds broader query matching, text customisation and final URL expansion.

Do I need a separate campaign for AI Overviews ads? No. Eligible Search, Shopping and Performance Max campaigns can already serve in and around AI Overviews and AI Mode. Lesson 15 covers how matching works.