PPC

Google Changes the Rules on Ad Formats

Field trip – the two magical words that filled every elementary student with joy. Whether the destination was the zoo or a museum, field trips were great not only because you got to leave school for a bit (though – who are we kidding? – that was definitely part of it), but also because you always learned something. Often you learned by traveling back in time. Let’s take a virtual field trip of our own and revisit a moment in our digital past, specifically October of 2013. The event we’re going to dive into is the Google update that integrated Ad Extensions into the Ad Rank formula.

Back in 2013 (which can seem like decades ago in Internet time), Google was just rolling out a new component to its Ad Rank formula. Previously, an ad’s position had been determined by two factors: the keyword’s Quality Score and its max CPC bid. In October 2013, Google shook things up by throwing Ad Extensions into the mix as a tiebreaker. Per Google, “If two competing ads have the same bid and quality, then the ad with the more positive expected impact from extensions will generally appear in a higher position that the other”. The noise you heard after this update was released was the sound of mass numbers of accounts running to utilize extensions to the max, and rightfully so.

Coming back to present day, Google has revisited the 2013 Ad Rank update and added a new twist. The AdWords auction will no longer allow ads in lower positions to receive more ad format prominence than ads in higher positions. Ad format prominence is an estimation of your ad’s visibility on the search results page, primarily measured by the average change in CTR resulting from adding ad formats (i.e. ad extensions).

How does this change benefit you? This latest update reduces the number of instances in which ads in the top position are displayed without ad formats, while ads in the second position are displayed with many formats. Our advice - if you were late to the initial extension party back in 2013, be early this time. Google began rolling this update out on March 31st, and although they haven’t yet announced a specific date on which the change will be fully implemented across all AdWords auctions, we can assume it will only a matter of days based on the pace of their previous SERP changes.

Here is an example of what the search result’s page will no longer look like. In the top position we see an ad with no extensions, yet below it we see multiple ads with extensions. With this update, we will see many fewer instances of this kind of imbalance.

Like a kid hitting the gift shop on the way home from a field trip, it’s easy to get caught up in the hype and add everything you can to the mix. However, it’s important to remember that Google Ad Rank considers not only the presence of  extensions and ad formats, but also their expected impact. Therefore, we recommend the following: 

What should advertisers do?
  • Do opt into formats. The update tweak encourages you to use all the ad formats that add value for your business, with the emphasis on “add value.” Make sure your extensions are relevant, have strong CTRs (reinforced above), and appear prominently on the SERP. Not all extensions are going to work across the board for everyone, so make sure to test in order to determine which ones work best for you in the context of your KPIs.
  • Don’t remove formats to reduce costs. You can generally get the same number of clicks for less money by using ad formats, but under the new formula eliminating ad extensions can potentially reduce Ad Rank. Instead, if you need to manage costs, do so by lowering bids.
  • Don’t micromanage extensions. In each auction, you’ll most likely be shown your highest performing and most useful combination of formats among those eligible. Therefore, there’s no need to try and guess which formats will help improve your CTR the most; launch the ones that are relevant to your business.