adRank and Quality Score

Let’s see first how Google defines it:

So, you ask, how is adRank determined? While bid price (the price advertisers are willing to pay for each click per thousand impressions) is obviously an important factor, we also calculate advertiser Quality Score to make sure the best performing ads will always appear on your site. Quality Score takes into account factors such as an ad’s relevancy and click-through rate (CTR) (i.e. how likely users are to click on a given ad) because a higher CTR sometimes outweighs the benefits of a higher bid price. This ensures that your site always displays the ads representing the highest revenue potential for you.

Source: http://adsense.blogspot.com/2006/02/ad-rank-explained.html

QS = Quality Score. See below.
CPM = Cost per thousand impressions. The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM equals $.01 per impression. $10 CPM / 1000 impressions = $.01 per impression.

Quality Score for Google and the search network is a dynamic metric assigned to each of your keywords. It’s calculated using a variety of factors and measures how relevant your keyword is to your ad group and to a user’s search query. The higher a keyword’s Quality Score, the lower its minimum bid and the better its ad position. Source: http://adwords.google.com/support/bin/answer.py?answer=21388

adRank and Quality Score in layman’s terms
To get better adRank and higer Quality Score formula do these:

1. Gain good keyword history
2. Increase CTR
3. Place adWords keywords on landing page, or find/publish better landing page