Adwords Right Rail Disappears ... What is the Impact?

So Google has disappeared Adwords ads from the right rail of search results pages, and also added a 4th ad in the top position for ‘commercial’ (e.g. competitive) searches.

Here’s the difference between last week and today (Feb 22, 2016):

Why did Google do this?

Google claims this is for better usability, which is certainly true on mobile devices, but there have to be more compelling reasons too.  In fact since this is a business may we suggest these two laws?

Law 1: Google makes more more money, or makes it more quickly, or both (we say both).

Law 2: Good usability contributes to long term customer satisfaction AND Law 1.

What’s the impact to your advertising campaign?

We’re not sure yet but here are some reasonable assumptions:

More clicks (money) for Google.

We  posit that the higher CTR enjoyed by top ads vs. side ads, combined with the additional ad at the top, will increase ad click volume which means fewer stranded ad dollars every day. Remember Google can see all the unused budget every day and it must have been driving them crazy. And that’s without taking the potential for higher CPC’s into account.

Increased CPC for you.

Fewer available ad spots will lead to more competition for the remaining ad spots.  This could mean that advertisers that preferred to sit in the lower ad positions may be forced to play a more competitive game; they can no longer sit on the right in positions 4 through 7 and pick up less expensive clicks.

The math should prove that the 4th ad position at the top more than replaces the revenue Google made on the side – (Law 1)

An interesting side effect may mean that low-cost advertisers can still get their ads placed, even on the top, once the big bidders and big budgets are exhausted each day.  Why? With more ads enjoying the higher CTR of top positions, more clicks will happen more quickly, and budget will be spent faster. That’s doubly true if ads eat up some traffic that previously went to now hidden organic listings. As a result, budget should be depleted faster too and if the big bidders run out of budget, then the low-bidders can join the party.

The evil genius of Law 1 shines through if Google can now move more ad budget by moving it more quickly every day, depleting your budget, and moving on to the next one that may have previously gone untapped.

Short term volatility.

Advertisers adjusting their bids to maintain ad positions will need to make updates. We don’t recommend this tactic for our clients  because we base our results on ROI (top listing or bottom listing, it’s not important) but this behaviour of others may cause auction patterns to fluctuate for a period as advertisers react to one another’s adjustments.  We are monitoring our accounts to see how the new competitive landscape will play out, it’s early and we’re confident we can make adjustments.

It’s critical that advertisers have clear visibility into their conversion and revenue from paid search advertising to know if they can increase budgets if required.

Less Organic Traffic.

Fourth ad position at the top likely pushes organic results off of some mobile form factors entirely. Anyone who previously defaulted to the first organic listing now has to scroll to do that. People are lazy and a healthy percentage of these people will now just click an ad instead of scrolling (yes, we know how easy it is to scroll with your finger….that’s how lazy people are!). This will have greatest impact on mobile devices where advertising growth has been strongest over the  few years.  Most mobile devices show paid search listings first and organic listings are now pushed below the fold.

Keep an eye on your organic traffic, if you have been relying on first place rankings to bring traffic you could see some volatility in the coming days. 

Want to read more? The folks at Search Engine Watch provide some insight from industry leaders.