So, what exactly is happening then?
Up until now the Google Ad Rank calculation has only ever used two factors when ordering ads on a search page, which were max CPC bid and the ad’s quality score. Google is changing this dynamic however and since its latest update will now factor in the expected impact from ad extensions and formats. This consequently has the knock on effect of increasing the importance Ad Rank will have when determining the eligibility of an ad to be displayed with extensions and formats.
What does this actually mean in practice?
- Well first and most obviously, ad extensions and formats can now directly influence the position of an ad on a search page. If your ad has better extensions than another ad with the same bid and quality score then it will now be your ad that gets the nod and appears higher.
- Secondly, given the fact that Ad Rank is now much more important in determining the likelihood of your ad appearing with extensions and formats, it may be necessary to increase an ad’s quality score and bid in order for extensions and formats to show.
- Third, in every search auction Google will generally show the highest performing and most useful combination of extensions and formats possible. This eliminates the need to test (or simply guess!) which of your extensions will improve clickthrough rate the most.
- Finally, when Google is estimating the potential impact of ad extensions and formats it will factor things such as relevance, prominence and clickthrough rates of the formats or extensions on the search results page.
- In addition to the above it’s also worth noting that currently this update will only affect search ads appearing on Google Search
So what effect will this have on my Adwords account?
Put simply these changes are likely going to result in some fluctuation of CPCs across your account. If you have implemented some highly relevant extensions and formats then you may start to see an immediate benefit of this with lower CPCs. All without any active input! Great news right? Well, in some cases the vast improvement your ad extensions and formats are having may push your ads into a higher ad position and accordingly you may have to pay a higher CPC to account for this. Surely more money for a higher ad position is an acceptable trade off though? Well, here comes the double edged sword of this update to dampen things a little. CPCs may also increase as a result of increased competition from other ads that previously were outscored by your own, but have benefitted from well implemented extensions and formats themselves. Guess you can’t win em all eh?
What should I take away from this?
Primarily that ad extensions and formats play a much more prominent role than they used to. Being one of only three factors used to determine Ad Rank they are now always worth considering and implementing. Initially there may be some re-ordering of ads as a consequence of this update going live and you will likely see some changes in CPCs across your Adwords accounts. However, understanding the impact this update brings and adjusting your ads accordingly could well mean that you profit from the added importance of ad extensions and formats and come out the other side with more useful, relevant and higher placing ads.