you can find information here https://support.google.com/adwords/answer/1752122?hl=en in short this is a formula that Google use to calculate where to show your advertisement - at position 2 or 11 clear formula was not announced publicly
Ad ranking formula is used to calculate your ads rank when it is displayed on serps. It is always a Google secret and no one knows what exactly it is. Previously it was something like this :- Ad rank = Max CPC * Quality Score, but now Google has done few modifications in it.
AdRank has been a secrecy b'coz I'm not understand how to calculate quality score; Now more confusing in it after new modifications.