Only one Text Ad within an Ad Group can be shown at any given time. To make sure that all Text Ads are shown, the Text Ads are rotated according to a specific strategy that is focused around a specific goal.
Text Ads within an Ad Group are rotated according to one of two strategies:
Optimize: Prefer best performing ads
Do Not Optimize: Rotate ads indefinitely
Text Ads will be shown according to either of these specific strategies – knowing which one is best for your particular campaign comes from experience and understanding your audience; when they look for products or services like yours and which Text Ads entice them to click more than others.
“Optimize: Prefer best performing ads” uses previous account data to discern which Text Ads are statistically more likely to perform better on the SERP – meaning that Text Ads that seem statistically more likely to receive clicks enter into the ad auction and are shown over those that don’t perform as well.
“Do Not Optimize: Rotate ads indefinitely” enters your ads into the ad auction evenly and without bias towards a particular ad and without using any previous performance data to present the highest quality ad (or, optimize), doing so for an indefinite amount of time. This means that low quality Text Ads will be shown as often as your high quality Text Ads. Google uses the quality of Text Ads (as well as other factors) to determine where on the SERP your Text Ad will appear, if it appears at all – so using this ad rotation setting may affect your position on the SERP for your lower quality Text Ads.
When using SmartBidding, Google Ads will automatically set the ad rotation to “Optimize”.
Your budget also plays a large role in how often your ads are shown – if your budget runs out, your ads will no longer be displayed.
Source: Use ad rotation