How does google determine the ad rotation for their ads?

Do they help publishers earn more, by displaying the highest paying?

[tomld2]

So I'm wondering how google defines it's ad rotation that displays on my sites. Meaning if a keyword that is relevant to my site has 5 bidders, will it display the ad with the highest bid first and most often to maximize my click revenue? Or is it all random?

Thanks
Tom

[ken_b]

It's based on a formula that takes the CTR and Bid Price into consideration. So a lower priced ad with a higher click thru could be number 1.

It also depends on an advertizers daily budget. If their budget is not enough to cover all their potential impressions their impressions will be spread out through the day.

And not all advertizers run the ads constantly. They can turn their ads on and off. For instance, some only run the ads during peak performing hours.