Quality Score is the basis for measuring the quality and relevance of your ads and determining your minimum CPC bid for Google and the search network. This score is determined by your keyword’s click through rate (CTR) on Google, and the relevance of your ad text, keyword, and landing page.”
Quality score effects your keywords minimum cost per click and position in the search results and also if your ad will even show at all!
This is fundamentally the same for the other first tier Pay Per Click networks (Yahoo Search Marketing and MSN AdCenter). There are many other factors involved, however this is the most transparency we’re going to get from them at this time. For now, we will deal with the Google Adwords quality score.
Around the same time of the release of Yahoo! Panama, Google began showing keyword quality information at the keyword level in Adwords accounts. Google shows weather your score is Great, OK or Poor.