Which best describes the relationship between maximum cost-per-click (max. cpc) bids and ad rank?

Question: Which best describes the relationship between maximum cost-per-click (CPC) bids and Ad Rank?

An increased CPC bid leads directly to a small increase in Ad Rank.
CPC bid only affects Ad Rank on the Search Network.
An increased CPC bid leads directly to a large increase in Ad Rank.
CPC bid is one factor that affects Ad Rank.

The correct answer is:

CPC bid is one factor that affects Ad Rank.

Explanations:

A value that’s used to determine your ad position (where ads are shown on a page) and whether your ads will display at all. Ad Rank is calculated using your bid amount, the components of Quality Score (expected click-through rate, ad relevance and landing page experience), and the expected impact of extensions and other ad formats.

The main components of your Ad Rank are your bids and the quality of your ads and website. Google also incorporate the expected impact from your extensions and other ad formats when computing your Ad Rank. When estimating the expected impact of extensions and ad formats, Google consider such factors as the relevance, clickthrough rates, and the prominence of the extensions or formats on the search results page. So even if your competition has higher bids than yours, you can still win a higher position at a lower price by using highly relevant keywords, ads, and extensions.

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