Google has made a significant change to the Search Engine Results Pages that sent shock waves through Paid Search and SEO communities. For desktop results, right-hand-side ads have now been removed, globally.

Instead, for what Google has dubbed “highly commercial queries”, up to four ads will now appear above the Natural Search listings, with an additional three appearing at the bottom of the page beneath this. As a result, the maximum number of Paid Search ads on the first page has been reduced from 11 to 7.

At the7stars we are currently monitoring performance data for the accounts we manage, but we expect to see the following:

• For advertisers who were previously averaging positions five and below (right-hand-side), a drop in CTR may be seen.

• As advertisers adjust to competing for fewer ad positions, an increase in CPC will be felt across the board, regardless of your position.

• Natural Search CTRs may also be affected, perhaps with drops in CTR for all results as they are pushed down by the additional Paid Search ads showing directly above

For advertisers previously occupying a Paid Search position of 5+, it is likely a strategy based on obtaining cost effective traffic, and receiving optimal ROI. The likely consequence of these changes is that advertisers will need to increase bids in order to maintain current levels of traffic, which in the short term will inevitably eat into the ROI that was being received.

Even without increasing bids, you may still experience increased costs as other advertisers increase theirs – and you will notice this across all positions.

Overall, this could have a significant impact not only on paid search strategy but digital strategy as a whole.

Possible scenarios include:

• Media spend in Google may need to be reallocated to other, more cost effective media channels to maintain a positive ROI

• Conversion Rate Optimisation may need to play a significantly larger role in digital strategy – if an advertiser’s competitors can stomach CPC increases, then it’s likely that they’re able to do so because their onsite conversion rate is better. Improving conversion rates may be the key to maintaining profitable traffic levels.                                        

• SEO vs PPC keyword strategy may need to be revised – with higher Paid Search CPCs, perhaps the more profitable opportunity lies with increased Natural Search visibility for some queries

So why has this happened? A cynical view is that this will increase Google’s average revenue per query – Google has suffered from declining revenues from desktop ads for a while now, and already attempted to remove right-hand-side ads in 2012. By removing the side ads and increasing the competition for top positions, Google is likely to see a lift in revenue.

Simultaneously, this move will see increasing competition and average CPCs, as the additional sponsored link above the Natural Search listings will mean yet more clicks on sponsored ads.

For users, this could signify the beginning of a move towards more streamlined results which will allow a more consistent user experience across mobile, tablet and desktop platforms, or it could be a move to further blur the line between ads and natural results.

For advertisers, this is a reason to be optimistic as, in terms of ad CTR, these changes are beneficial. Ultimately, this will drive advertisers to be even more savvy with implementation and strategy, ensuring a clear priority on appearing in the top positions at the right time while minimising wastage. After all, Google relies on advertisers making a success of their campaigns to maintain a competitive channel. If advertisers aren’t successful, fewer people invest in AdWords, which would make the changes counter-intuitive for them.

Utilising audience lists and bidding tools to assist this will be key. The ROI will still be there for the taking – we may just need to work a little harder to find it.

 

By Adam Chugg at the7stars

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