Quality Score is the metric Google uses to determine the quality (duh) and relevance of your ad copy and landing page in relation to a given keyword. It’s then used to calculate your cost per click (CPC) and ad rank for that keyword. The higher your relevance and your Quality Score, the better your ad rank and the less you pay every time someone clicks on your ad.
To determine the position of the ad on a search engine, each ad is allocated with adrank which is the product of bid * Quality Score. Ads are then listed in descending order based on the result of that equation. The exact weight of Quality Score versus bid has not been revealed by any of the major search engines, and each company has stated that they reserve the right to continually adjust their ranking methodologies.
In late 2008, Google revealed that Quality Score was used to determine which ads it would show above organic results, and that a high quality score could actually cause ads to jump over ads with lower quality scores that would otherwise not merit that prominent placement.