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Google AdWords’ New Layout: It’s Impact On Search Engine Marketing(SEM)

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Google’s advertising system is Google AdWords where advertisers bid on certain keywords in order for their clickable ads to appear in Google’s search results. Google makes money when advertisers have to pay for these clicks. However, AdWords may or may not work for your business depending upon the competitiveness of the keywords and the relevance of those keywords to real conversions for the company. As long as you don’t waste your money on wrong keywords, or write weak and low CTR ads, these Google AdWords are effective for almost every kind of businesses. But who decides the position of the ads? The actual position of the ads are determined by the ad rank that is, maximum bid times quality score.

The highest ad rank gets the place of 1st position while those ranked lower takes position 2nd or 3rd depending upon their ranks. The actual Cost per Click or CPC is determined by the ad rank of the next highest ad below your ad divided by the quality score of your ad. The only exception of this case is when you are the only bidder or the lowest bid in the AdWords auction then you have to pay your maximum bid per click. Those with high-Quality Scores get higher ad ranks and lower CPC. However, advertisers are heavily penalized for bidding with low-quality scores.

Sources: wpengine.netdna-cdn.com

Sources: wpengine.netdna-cdn.com

Google has started these AdWords in 2006 and since then there was no major change except its 4-Ad format which rolled out last week. Well, there’s much hullabaloo after Google’s official announcement about the changes where the 4 AdWord layouts above the organic search results went from small test to live. It indeed is pretty significant news for most of us including SEO experts and PPC marketers. Search Engine Optimizers who are witnessing their sites being pushed down the page because of an additional ad is making them rethink their SEO strategy. For marketers and advertisers, there is a sudden change in the AdWords bidding landscape.

A Google spokesperson announced ‘’we have been testing this layout for a long time, so some people might see it on a very small number of commercial queries. We will continue to make tweaks, but this is designed for highly commercial queries where the layout is able to provide more relevant results for people searching and better performance for advertisers.” Now, one thing to be focused here is high commercial queries. By highly commercial queries refer to those types of searches where people to show an urgent and deep intention to buy the product. Basically, it means you are in the buying phase instead of research phase. For instance, you need a car and type “buy cars.” With this type of search query, you will see the 4 ads above the organic search results. Highest value keywords are also there which means it will be crucial to be in the top 4 positions but also to do efforts towards getting a very high quality score in order to lessen the cost per click or CPC.

Google only showing 1-4 ads above the organic search result and forcing the results to the bottom of the page will have several impacts on the marketers. Now, less ad inventory are available, it is obvious that the competition for that inventory will be cut throat. That means the bids will rise up considerably. However, it is time to say goodbye to the smaller companies. The click through rates on the right-hand side ads were considerably lower than the ads that were placed at the top, they were still getting clicks. This will definitely have an impact on the smaller companies. The bids were lower than the top ads and allowed new advertisers or those with petite budgets, to appear side by side their more well known and good funded competitors. So, even if these advertisers get lesser clicks, there were still added benefits of impressions. Companies will now be spending millions of dollars to get a few seconds showcase. This will surely bring a better click through rates on their ads since with this 4-Ad layout there will be fewer options to click on.  But this might make holes in their pockets.

According to an analysis across all iProspect UK clients, the ads in the banner positions receive 14 times more Click Through Rate of the same ad on the same keyword on the right-hand side. While Google is continually making alterations to its core algorithms, this is one of the most significant changes in quite some time and points to the growing trend of increased mobile searches. The long-term impact of these changes, and how they will impact search results (paid and organic), will be seen in the future but it is clear that FX marketers will likely need to make adjustments to their Google AdWords campaigns as soon as possible. Whereas, the PPC results are getting more expensive as a result CPCs will sky-rocket. With that being implied it means that SEO has to do more work than ever before. The campaigns should be balanced and tested, to know how much PPC slack your SEO can pick up. More PPC ads, as compared to organic results, can mean more traffic on high-ROI terms, so this can really allow businesses access to more and better traffic than ever before.

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It is crucial to understand the change of Google AdWords on advertisers.  There will be lots and lots of analysis work for the PPC teams to adapt themselves to the new changed layout implied by Google. The whole impact may not reveal itself for some time. However, there are some immediate impacts which can be seen. Let us have a look on some of the points that are jotted down below to summarize the scenario:

  • Increased competition:

For obvious reasons, the competition will take a huge upheaval. There will be high competition for the top 4 ad position which means there will be an immediate impact on cost per click. The CPC inflation will reduce the advertiser’s ability to buy impression share if they don’t increase their budgets. Also note that, for industries which are dominated by a small number of general terms like insurance, the inflation rate could be crucial and significant since the already competitive market is getting heads over toes.

  • Change in the bidding strategies:

There will be complete upside down with respect to bidding strategies. Those clients for whom careful bidding strategies bring efficiency via generic ads appearing in 5-10 positions will have to re-consider their strategies to survive in the competition.

  • Long tail keywords and the brand term search activity:

Since there will be more competition for short tail keywords and generic terms which will increase their costs, making them potentially less efficient. The use of long tail keywords and brand term search activity could be even more crucial for marketers.

  • Re-Marketing Lists for Search Ads or RLSA:

As the competition will rise, there will be now more aggressive auction that will demand an effective strategy for the use of Re Marketing Lists for Search Ads or RLSA so that bids for different types of audiences can be differentiated. A carefully balanced to deliver an efficient paid search campaign will have to be re-structured. All these factors will be crucial to delivering a good Return on Investment (ROI).

  • The importance of Ad extensions:

The Ad extensions will become more important as they will contribute to Quality Score as well as to ad rank. The correlation between Ad extensions and QS is positive which means the more extensions are set up the greater is the opportunity to increase Quality Score. Hence, helping to keep CPC under control and improving click through in an expensive top positions. One positive opportunity is that ad extensions will also be appearing for the ads placed at the bottom of the search result page.

  • Well Optimized site:

Finally, what is the most important aspect of this whole haywire is the urgency to maintain a well-optimized site and a holistic approach to Search Engine Marketing (SEM) strategy. In case, advertisers are not active, the SEM strategy should be in such a way that it consistently delivers page 1 natural search listings for key generic terms so that advertisers don’t lose their share of clicks and impressions.

Google has always been up for change and is still tweaking its functionality and designs. Being an 80-90% owner of shares in the market, every change made by Google will impact most of us. Be an opportunist and make strategies accordingly to survive in the competition.

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