Google Changes Ad Format on Desktop

Collective Measures
February 23, 2016
Google confirmed that it will be changing its ad format in search results on desktop. How will the change impact digital marketing? Find out here.

Google confirmed late last week that it will be limiting text ads on desktop devices, with ads no longer appearing on the right side of the search results for most searches. In addition, it may show a fourth result above the organic results when the search query is highly commercial.

 

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Photo from PPC Hero.

This update is something that has been in the works for a long time, with some initial Google experiments having started as early as 2010. While this may be a large shift for desktop search results, it is more in line to what users may currently expect to see on mobile devices.

IMPACT ON MEDIA PERFORMANCE

So, how is this going to affect media performance? At this point it is relatively unknown, though if you’ve been in the digital space for a while, you may have observed that releases touted as “game changers” tend to be small shifts geared towards improved relevancy for the user, and not cause for big changes in the business of marketing.

When it comes to basic metrics impact, this change will likely:

  • Lower ad impressions in paid search,
  • Increase click-through rates (CTRs) in paid search
  • Increase cost-per-click (CPCs) in paid search

Overall, the expectation is that this will be somewhat similar to what we have seen in the mobile search space – some increases in average cost-per-click could lead to a higher cost per acquisition (CPA) or lower return on ad spend (ROAS). The reason? We’ll see the same amount of advertisers competing for fewer available ad positions.

We also expect to see a change in the performance of organic results. Some verticals will likely see a higher percentage of people clicking on paid ads since organic will be shifted farther down the page. On the other hand, if cost-per-acquisition rises on the paid side, advertisers may shift those dollars to focus on organic optimization, ultimately increasing competitive influences organically as well.

If this change does drive an increase in the competitiveness of search results, testing and expanding into new keyword segments may prove expensive in paid search. A week ago, you could test a new keyword segment with a low relative average position – with a low relative CPC – to get a general idea if the segment was worth investing in. Now, investments may need to be more robust to compete with advertisers already established across the (now) limited positions for these keyword segments.

PLANNING FOR THE FUTURE

In the short term, you may want to plan for volatility in your paid search media performance until you can set new performance benchmarks. Be sure to also have best practices in place for your campaigns, including core campaign and Quality Score optimizations, and ad copy / landing page testing to improve efficiency.

For the long term, we believe boosting the attractiveness of organic results to influence CTR will be key, as Google continues to look for ways to shift search behavior to the paid ads.

 

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