October 26, 2017
Metric Theory Wins Two Prestigious 2017 Landy Awards
Google has been experimenting with placing text ads only on the top and bottom of the SERPs for some time now. Late last week, Google shifted a significant percentage of overall search queries to this format and right-hand text ads are no longer showing. Tuesday, 2/23/2016, was the first full day in the US without any text ads on the right-hand side.
While we were aware of the change on Friday, we wanted to evaluate at least one full day of data after the switchover before projecting any larger impacts. Taking into account that this change is still very new and the data is limited, our initial analysis indicates that many predicted negative impacts are overblown, and that these changes will likely drive increased PPC volume for many advertisers.
Most advertisers should see increased traffic volume from text ads. Based on our January data across 200 accounts, 89% of Google text ad clicks were from ads in the Top positions. By adding a 4th position to the top, Google is giving advertisers extra ad inventory in a section of the SERP that generates a much higher CTR than side ads. In fact, that CTR is so much higher that clicks from the new position 4 should generally outweigh any losses due to the removal of right-hand text ads. Looking at recent data, we see a CTR of 10% for Top positions vs a CTR of 1% for Other positions (side, bottom, etc.).
While our early data shows a 4% decline in Google text ad impressions (mostly from ‘Other’ positions), we are seeing a 9% increase in text ad clicks overall. That is a significant increase and something we will be keeping a close eye on over the next few days and weeks for all accounts. If that trend continues, it could have implications for budgeting, forecasting, and more as the spring season gets under way.
It is possible that certain advertisers with low bids and low positioning relative to their competitors could see volume declines. If those advertisers are rarely ever showing in the Top positions going forward, they could have problems generating click volume. With that said, our early data indicates that very few of our clients are experiencing volume declines.
Most advertisers should see increased traffic volume from Shopping ads. Google will likely show more Shopping ad impressions on the right-hand side than previously. In addition, with no text ads on the right-hand side, Shopping ads placed there should have a higher CTR.
Opening up more impressions for Shopping ads could be one of Google’s biggest reasons for this change. Our early data shows an 18% increase in Shopping clicks with a 21% increase in Shopping impressions.
At this time, we see little reason for most advertisers to increase bids. If anything, certain advertisers might need to reduce bids to stay at budget in light of the increased click volume for position 4 and Shopping ads.
Early data is not showing CPC increases for text ads. Shopping ads are showing a slight increase in CPCs, but that could be normal variability. However, if a number of advertisers overreact and/or more advertisers seek to maximize their exposure in the Top 4 positions, then CPCs could increase due to the increased competition and higher bids.
From early observations, Google is likely changing how ads are displayed when they are in the Top positions (especially when there are 4 ads in the Top section). For one, Enhanced Sitelinks will rarely (if ever) show. In addition, Google seems to be showing fewer ad extensions than previously for the Top ads.
In general, Google is often compressing the Top 4 ads. This means that certain ads will take up less screen real-estate than previously.
For brand queries, Google is still often showing one brand ad and zero or a limited number of competitors’ ads, and not always four ads at the top. For non-brand organic traffic, there could be a negative impact from a new position 4 above the organic results.
However, this change has actually reduced the number of ads above the fold on desktop. Previously, for many searches, there were 3 Top text ads and 4-5 right-hand text ads (all above the fold along with 1-2 organic results). There is a chance the reduction from 7 text ads above the fold to 4 text ads will not impact SEO as strongly as many predict. Time will tell, though we would not be surprised to see a shift of clicks away from organic and to paid search, since that is a long-term trend for Google.
Overall, while this is a significant change to Google’s SERPs and ad layout, we don’t expect negative volume swings for most advertisers and we anticipate many will see increased paid search click volume. We will continue to monitor the data and use that as our basis for making any necessary decisions and adjustments.