Over the weekend, breaking news hit the digital marketing world as rumors came to fruition that Google has rolled out a significant change, which drops ads from the right side of a search engine results page (SERP) on desktops and tablets. Pay-per-click (PPC) ads will now only be served above and below organic search results for those queries Google defines as “commercial queries.”
Google will serve up to four ads on top above organic results and up to three ads below organic results. Product-listing-ads (PLAs), also known as Shopping campaign ads, will continue to be served on the right side of the SERP.
Here is an example from a search today on Google:
The impact to consumers is this change will provide a much cleaner SERP when combing through results for their respective query. In addition, consumers will start to see more features such as Knowledge Panels and PLAs related to their search queries. Over the years, Google has been increasing the delivery of these attributes in SERPs. Freeing up the right rail with this new rollout will only pave the way for their increased serving and usage among searchers.
For advertisers, the change naturally means PPC advertising will become more competitive, as the space for ad serving is decreasing from 11 potential spots on a SERP down to approximately six or seven. This will in turn impact average cost-per-clicks (CPC) and potentially overall budgets for advertisers.
As a result, if advertisers are unable to drive acquisition efficiency in PPC as the serving space becomes more limited, the trend of shifting marketing spend into native advertising may become more of a reality. Finally, there will be a direct impact to SEO. Now with four ads on the top of the page, results in the natural search section of the SERP will most likely not appear until below the fold of the page.
As campaigns and overall performance of PPC will show fluctuations in the interim, it is foreseeable that many marketers (both in-house and agency) will be asked to explain this occurrence. Here are some key points one should highlight when communicating performance, future strategy and investment for PPC campaigns:
In addition, it is good to have some insight behind the new SERP modification in your back pocket. Some have speculated a growing decrease in click-thru-rates (CTRs) on the right-rail ads has led to Google implementing this new format. Other reports indicate the change is in response to Google’s move to make desktop search results more in alignment with mobile search results. This speculation could be due to more traffic, at potentially lower CPCs, coming through mobile search campaigns versus desktop and tablet.
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A direct impact immediately will be the rise in CPCs at the keyword-level up to the channel-level. Historically, a tool which helps to reign in CPC is Quality Score. Quality Score is the value, between 1-10 (10 being the highest), which Google assigns to each keyword in your campaign to measure the quality of ad and landing page served for that particular keyword. A higher Quality Score can be achieved by:
The better Quality Score a keyword has then the potential increases for that keyword to win a better ad position at a lower CPC at auction. Here is an example:
Given the potential rise in CPCs, driving better Quality Scores should be a key tactic to being more efficient with marketing spend and driving acquisitions for PPC.
Monitoring AdWords Metrics – Ad Position and Est. Top of Page Bid
At a high-level, most marketers evaluate campaign success looking at traffic levels, CTRs, conversions and conversion rates. To pinpoint optimizations for a given campaign, some marketers may look at AdWords metrics at the granular level, such as ad position, estimated first-page bid, estimated top of page bid, estimated first position and search impression share. Due to this SERP layout change, marketers should start paying attention to the following metrics, if they haven’t previously:
If the goal is to drive the best CTRs and conversion rates from PPC, the best chance of achieving this is by driving ad serving opportunities to the top ad positions of the page (positions one thru four). The ad position metric will allow advertisers to gauge where, on average, their ads are being placed on the SERP.
Since ads at the top positions typically drive more clicks than right-side ads, marketers should expect this gap to grow even more with the new format. Thus, acquiring top ad positions for campaigns will play a bigger role in improving CTRs. In addition, the ad position metric compared against the estimated top of page bid and maximum CPC levels will direct whether bids need to be optimized to drive better performance.
Finally, the search impression share will shed light on if an advertiser is approaching a point of diminishing returns for optimizing their campaigns. If a marketer has a search impression share of 90% and an average ad position of 1.2, additional spend or optimizations may become more difficult to justify. However, if a campaign has a search impression share of 20% and an average ad position of 5.0, there are much more opportunities where implementing optimizations can drive better performance.
There are several optimizations that can be implemented to help brace the impact of this change in ad serving opportunities. While there is no magic bullet for any marketing strategy, these are best practices typically shouted from the rooftops by the top PPC marketers.
Flexible Bid Strategies: Target Search Page Location is a type of flexible bid strategy where AdWords will optimize a campaign’s bids to serve ads at the top of the page for search results. A bid will be updated several times throughout the day to show ads to a targeted location on the SERP.
Long-Tail Keywords: Adding new, highly relevant keywords, especially those to drive long-tail traffic, can improve the number of clicks and potentially lead to the acquisition of new customers who may not have been discovered through shorter keyword phrases. Typically long-tail keywords are also at a lower CPC. So as CPC for top ad position grows more competitive quickly among header terms, a campaign can keep control on spend by driving more converting traffic through long-tail keywords.
Conversion-Centric Optimizations: For successful digital marketing channel managers, tracking performance metrics is a must. If a campaign’s goal is drive revenue, then the campaign should be optimized toward return-on-ad-spend (ROAS). If a campaign’s goal is to drive leads, then the campaign should be optimized toward conversions and conversion rate. If a campaign’s goal is to drive traffic, the campaign should optimize to maximize clicks.
The point, of drilling down into how a campaign’s goal is defined, is that an advertiser shouldn’t make changes to a campaign which doesn’t align to the end-goal or desired behavior from a consumer. In the flurry of understanding this new SERP layout, many marketers may be tempted to drive up spend or optimize toward CPC. If a campaign’s success is defined by conversions, then changes should be in alignment with cost-per-acquisition (CPA) targets versus maximizing clicks or lowering CPC.
As in all things in a growing digital world, change is inevitable. How we adapt to change is the key. While this new PPC ad format may impact campaigns and create performance fluctuations in the short-term, digital advertisers can still drive performance and conversion goals from PPC. PPC should and will continue to remain a viable marketing channel for any digital strategy.
The defining characteristic will be for marketers to figure out how PPC exists within their digital marketing matrix. Marketers who can maneuver above this hurdle will be those that figure out how to allocate spend to play to PPC’s strengths and how to align PPC strategies to work in conjunction with other digital channels, such as organic. One thing we do know for certain is that this will not be the last change Google will be making to SERPs. Fasten your seatbelts; it’s going to be a bumpy ride.
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