POV: Google AdWords Ad Rank Change
MINDSHARE POINT OF VIEW: Google has changed its Ad Rank formula, which determines the order in which competing paid search ads are displayed on the SERP (Search Engine Results Page). In the past, an ad’s position on the SERP was dictated by a combination of two factors: Max CPC Bid multiplied by Quality Score. Google is now incorporating the use of ad extensions into the Ad Rank calculation as well. Ad extensions, which are visual enhancements to advertisers’ search ads, such as location or social annotations, are taken into account if two competing ads have the same bid and quality. With this new calculation the ad with the more positive expected impact from extensions will appear in a higher position.
The change has been brought in under the umbrella of creating a more relevant ad experience for search users.
Having extensions and more engaging ad formats has shifted from being a “nice to have” to a new standard for advertisers to maintain their strong presence and visibility. The new Ad Rank calculation is impacting all accounts opted into the Google search network. Brands need to understand some of the key implications this change will have on ads, in order to continue to have successful campaigns.
- Even if advertisers currently have ad extensions, they aren’t necessarily in the clear: While an advertiser may already have Ad Extensions as part of their campaign, if Google does not deem them as highly relevant to the consumer’s search, Ad Rank is expected to be low. With that said, advertisers not using ad extensions can expect lower Ad Rank as part of this change.
- Anticipate changes in your CPCs: Ad Rank is now more important in determining whether your ad is shown with extensions and formats, so brands may need to adjust their bid, improve their Quality Score, or both for extensions and formats to appear in search results.
- You may see lower CPCs if your existing extensions and formats are highly relevant
- In other cases, you may see higher CPCs because of an improvement in ad position by a competitor or if new competitors with ad extensions enter the marketplace
- Organic listings move lower down the SERP: Ad Extensions create larger paid search ad formats, which consume more space on the SERP. As more advertisers opt into these extensions, we can anticipate organic listings will move further down the page. The result being that consumers may begin clicking on paid listings more frequently, as these units will own the prime real estate ‘above the fold’.
Advertisers have always been encouraged by Google to leverage ad extensions, now it has become essential to running a successful campaign. Advertisers should focus on improving their consumer’s journey in search, while strategically deciding which extensions make the most sense for their business and business goals (to create that positive affinity Google now requires) and update their campaigns as soon as possible.
Advertisers also need to closely monitor their CPCs and Quality Scores. Whether they have existing extensions or not, these changes to Ad Rank will impact their business and there will be a need to incorporate and adapt to this significant change in paid search advertising.