What is changing?

From 19th February 2016, it has become apparent that Google is making a significant change to the way in which AdWords paid search ads are displayed on all of its Google search properties. After a long period of testing, Google is permanently removing all right hand side ad placements from the Search Engine Results Page (SERP).

Google is yet to make an official announcement on the changes, however, many users and notable industry sources began to report the changes over the weekend.

The most official response so far as come via a Google spokesperson to a Search Engine Land post:

“We’ve been testing this layout for a long time, so some people might see it on a very small number of commercial queries. We’ll continue to make tweaks, but this is designed for highly commercial queries where the layout is able to provide more relevant results for people searching and better performance for advertisers.”

This change means that the only paid search ad placements remaining within the Google SERP will be:

  • Text ads directly above and below the organic results
  • Product Listing Ads (PLAs) above and to the right hand side of the search results
  • Ads within the knowledge panel– including hotel pricing ads (global) and shopping ads (UK)

Another notable change is that Google will now serve up to four ads above the organic search results (see Figure 2). This is an increase from the previous limit of three. This update has been reported to be in testing by Google since 2010. The 4th paid search ad placement at the top of the page is reported to only show for “highly commercial queries”.

Impact for advertisers

With well in excess of 100 billion searches made on the platform every month, and the majority of the company’s profits deriving from paid search advertising, the decision for Google to make this update will not have been taken lightly – and will no doubt be based on maximising Google’s own earnings as well as the end user experience within the search engine platform.

This update has been rolled out gradually over the past few days. As such, it has not been seen across all user search queries meaning an impact assessment is hard to make at this stage. However, predictions on how this will come to affect advertisers largely fall into four categories:

  1. A Potential Increase in Paid Search Cost Per Click

With a drastic reduction in the volume of supply for ad inventory, and a continuing increase in the number of advertisers bidding for position within the paid search space, it is expected that the average cost per click (CPC) for advertisers will increase as a result of these changes. Reprise will continue to focus on cost-efficiency and client business success metrics in our bid strategies – such as on-site conversions, website engagement, and sales; rather than attractive Click-Through Rate (CTR) and average position metrics.

  1. A Potential Decrease In Paid Search Traffic

Industry benchmarks tell us that 7% of customers clicked the ads on the right hand side of the desktop SERP, therefore a 7% traffic decrease could be implied. However, this is a generalised number and can vary by industry and query, hence may not always be the case. Additionally, the inclusion of the 4th paid listing will make up for some of the lost ad positions. Also, with over 50% of searches in Australia performed from a mobile device, which do not carry right hand ads, the change will affect only half of all searches made.

  1. Changing Rates of Organic Search Traffic

The changes Google is making to the SERP will not only affect paid search performance; the removal of right hand side ad placements and an additional top of page placement is highly likely to affect organic search as well. With fewer paid search links on the Google SERP, there is more opportunity for a higher organic share of clicks – which may positively influence the volume of traffic websites receive from these results. However, a wealth of search data has shown top of page positions elicit the highest click through rates and, with the addition of a 4th paid search ad placement, organic results will be pushed further down the SERP which is likely to negatively impact traffic from organic results.

  1. Mobile, PLAs & Other Considerations

Google does not show right hand side ads on mobile devices and increased the number of paid ads at the top of mobile search results from two to three in 2015. As such, the removal of right hand side ad placements and the additional placements above desktop organic search results is consistent with Google’s drive to bring together the search experience & user behaviour measurement across devices. The addition of a 4th top paid search ad is also similar to the way in which paid search ads are displayed on Bing in Australia and Yahoo in other markets. Another consideration for ecommerce retailers currently running Google AdWords Shopping campaigns is that the removal of right hand side text ads does create more real estate and less distraction for Product Listing Ads (PLAs). PLAs have been shown to drive a very strong return on advertising spend and this may help to increase CTRs for these ad units, so this could be good news for advertisers operating in this space.

Next steps

Moving forward, the ‘definition’ of average position will change, and future CTR/CPC performance will need to be analysed taking account of the new benchmarks. Both paid and organic search performance will be carefully monitored over the coming days, weeks and months in order to analyse how the changes are impacting metrics. Reprise will work closely with both regional Google teams and international Reprise offices to ensure that the impact of these updates are fully understood. We will keep our clients informed as to how these changes will affect their business, however please do not hesitate to get in contact with your Reprise Client Advisory Manager to discuss any queries or concerns.

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Paul Watson

Hi! I'm Head of Paid Digital Solutions here at Reprise. With over 10 years of experience of in digital marketing, I have a passion for all things digital. I love helping clients to leverage the power of digital media strategies to deliver on their business goals.
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