Right Side Down – The Full Rundown on What Google AdWords Changes Really Mean

Guess what everybody, Google has had a shake up!

It’s always exciting when the world’s biggest search engine makes a significant change. Whether it be to its algorithms, its layout, or even just an interesting Doodle, everyone wants to be in the know what Google is doing next.

Well sit back, because this one is a bit of a doozy. While it’s not an algorithm change like last year’s mobile optimisation switch up, the news out of Silicon Valley today is still going to have a massive effect on what you see on the front page when you type in a search term.

But if it’s not results, then what are the changes going to be? Get on with it, you say? Fair enough. Well, as of February 17th, Google has started to change the way their AdWords system displays ads on the first page of search results.

If you’re familiar with the current system, you’ll know that Google shows up to three relevant ads above the search results, a bunch of ads along the right hand side, and a few down the bottom. Well, say goodbye to those oft overlooked ads on the right, because they are outta here! Now, ads will only be shown on the top and bottom of the search results.

Sounds great! Less ads on the front page means less clutter and less distractions to what you came for, right? Yes, but there is one caveat. To make up for the lost revenue of the right hand side ads, Google is adding the potential for a fourth ad above the search results for what it dubs “highly commercial queries”. More on this later.

Why?

The first and most obvious question to ask is why the change? There are several factors at play, and they all had an impact on Google’s decision.

At the heart is a desire by the search giant to improve the relevance of the ads it shows. Don’t take this as being entirely altruistic – more relevant ads for users means a high click through rate and a higher click through rate means more revenue.

adwords update
Competitive search term showing four ads up top

At the moment, there is a culture within the industry of AdWords management of companies who use the tool as a way to exploit their clients for easy money without providing a service in return. These unethical managers allow their client’s ads to sit in the right hand side results, returning poor click through rates, without taking the initiative to drive the ads further up the rankings to be displayed where they will actually be seen. By removing the right hand side ads, Google has effectively made this poor business practice obsolete. This will carry over as better value for money results for companies who entrust their AdWords management to outside advisors.

Google also made this change because they are aware of which ads are the most effective. Most people know that the right hand side results were all sponsored content, and ignored them entirely. Therefore the click through rate for them was poor. The top and bottom ads however, blend into the organic results much better, and their click through rate is correspondingly higher. By wedging more of these ads above and below, Google hopes to get better value out of their ad space.

Isn’t This All a Little Sudden?

This quite radical change to the way Google controls its ad space feels as though it’s come about all at once, but the truth is this is a change that has been a long time in the making: a lot longer than most of the changes Google implements. While it’s only since the 18th of February that the new system started to be rolled out on a major, worldwide scale, Google has been experimenting with a four ad pack above the search results as far back as 2010, with a marked increase late last year. While Google has never stated that it wanted to make the changes anything more than an experiment, there have been some obvious flags that it was something they were considering.

Vertical Space

By putting an extra ad at the top and and the bottom of the first page, the number of organic results that are going to be shown there will be reduced. While every search won’t automatically result in four ads being displayed up top, commercial, highly competitive search terms will have organic results forced lower down the page. For some results, people will actually have to scroll downwards before they even see the first organic listing, when space for four ads and a map pack to boot is already taken.

But what about all that other space. You know, off to the right there where nobody used to look. What’s it going to be used for now? Technically, it will still feature ads, but they will be a very different form of ad to what came before. PLAs, or Product Listing Advertisements, will be featured on the right hand side of the results featuring sponsored links to products related to the search term. For instance if you search “bikes” you may be presented with PLAs of bikes from various sellers around the web.

msauarticlebikes

Alternatively, Google may show you a knowledge graph related to your search terms. These knowledge graphs have appeared in Google for a long time, but they now have the space of the former right hand side ads available to be displayed in. A knowledge graph is a tool Google uses to show you information that can be quickly and easily displayed without clicking through to an external website. Unit converters and Wikipedia snippets are both examples of Knowledge graphs.

msauarticlejuliusceaser

Cost Per Click

Under the old advertising system, there was a maximum of eleven ads on the front page, whereas now there will be space for just seven. Though there will be more ads top and bottom, there will be fewer in total.

So what does this mean for advertisers in terms of costs? Well at the moment it’s a little hard to say, and truthfully things could go either way. While it’s likely that the cost of getting an ad on the front page itself will rise, things are a little more complex than simply saying it will therefore be less affordable for advertisers.

Under the previous system, while it was not that expensive or difficult to get an ad on the first page in the right hand side results, it was much harder to get that same ad into the ad results that actually mattered: the top and to a lesser extent the bottom. There is now an extra ad space in these high converting areas, meaning more supply. More supply should theoretically lower the cost of getting an ad into premium space. So, to sum up, the entry level cost of an ad on the front page will most likely rise, but the premium cost for an ad in the important results should fall. Theoretically. Whether either of these assumptions eventuate remains to be seen and will largely be determined by the people who make the bids.

This is why here at Matter Solutions we’ve always advised our AdWords clients to bid for the top three results in the past. Even though the initial bid was necessarily higher, the click through rate and conversion rate was always so much better that the extra cost was well worth the improved performance. Google knows this, and that’s why they’ve decided to streamline the process away from the inferior right hand side results, towards a system which will reward the advertisers and managers who put effort into making their ads as relevant as possible.

The Good

Which brings us to the important question: what’s going to be good about this change? We mentioned earlier how dodgy AdWords managers could in the past practically extort their clients by charging them for AdWords management that consisted of nothing more than letting their campaigns sit, garnering lukewarm results. Enough to keep them in the low value right hand side results while never progressing to the more valuable top and bottom results.

This change more or less stops any shady managers from carrying out this practice. It will massively reward those campaigns that put the effort into creating relevant ads, and with extra spaces to work with Google can give out these valuable positions to a greater number of deserving ads. Meanwhile, those ads that were not optimised and were only staying on the front page thanks to a lack of competition will be moved on. Google is effectively chopping out the rotting wood of the AdWords system, ensuring that only the highest quality, most relevant ads enjoy front page real estate.

Now let’s talk about quality score, and why the new system will encourage advertisers to improve theirs. The more relevant an ad is to its landing page, the higher the quality score. The higher the quality score, the better the better the ad position will be, the less it will cost per click and the more cost effective it will be. In the past, getting onto the front page did not require such a high quality score as the right hand side results were so much easier to get into. Now that they’re gone and the total number of ads has been reduced, it’s going to take a good quality score to get anywhere near the front page. AdWords managers simply won’t be able to let their client’s campaigns sit gathering dust while they collect management fees, because no client will be happy with their ads not being in a prominent position.

Effectively, these changes are going to weed out the weak, the poorly optimised and the irrelevant ads out there and replace them with ads that make an effort to provide users with relevant content. The strong will get strong and the weak weaker, and the AdWords managers who once made a pretty penny pulling the wool over their client’s eyes are likely to have a nice long whinge.

The Bad

While in terms of providing better and more relevant ads this update is solely positive, it’s still a bit of a kick for people looking to avoid ads, no matter their quality, entirely. Those who immediately skim over the yellow labeled ads in their search results will now have to skim further than they did in the past. No longer will they be able to ignore ads by simply not looking to the right, they will have to sift more of them out while searching for the organic results they’re looking for.

Since the first four results in highly competitive, marketable search terms are now going to all be ads, pressure is subtly applied to companies who don’t advertise to now do so. Being forced so far down the SERPs (Search Engine Results Per Page) means that to get the visibility that companies in their position crave, they will be more or less be forced to join the advertising bidding war in order to get their site the same exposure as their competitors.

All Things Considered

Google’s update of its advertising strategy is going to have wide ranging effects on consumers and advertisers alike, some positive, some less so. No matter your opinion on the new changes, there’s no denying their importance in the future of AdWords management. Understanding the changes and learning how to take advantage of them moving forward will be critical for developing the best possible advertising campaigns for clients.