The maximum amount an advertiser is willing to pay for each click on a keyword in Google Ads.
For example, if Sakshi owns a furniture brand, she might bid on the keyword “buy furniture online”. So, when someone searches those words online, Sakshi’s furniture ad would be displayed in the result.
However, if multiple people have bid on the same keyword, Google conducts an automatic auction. It evaluates the maximum bid of each advertiser & the Quality Score of the ad. This way, the ad with the higher bid & higher quality gets displayed first.