Once a query is made on Google, the search engine processes the request and runs with the auction which will determine the ad positions and each advertiser CPC.
When we are searching, the Google ads system finds all ads whose keywords match that search.
From those ads, the system ignores that they aren’t eligible, like ads that target a different country or disapproved based on a policy violation.
Of the remaining ads, only those with a sufficiently high Ad rank can show. Ad Rank is a combination of your bid, ad quality, the Ad Rank thresholds, the context of the persons’ search, and the expected impact of extensions and other ad formats.
The most important thing is to remember is that it lets your competition bids higher than you, you can still win a higher position at a lower price with high relevant keywords and ads. Since the auction process is repeated for every search on Google, each auction can have different results and it’s depending on the competition at that moment.