Earlier this year, Google decided to remove ads from the right side panel of desktop search results page. This left advertisers panicked as they questioned the change’s impact on competition, cost, and impressions. This seemingly radical decision was derived from years of internal studies; the results indicated minimal or no clicks for the right side ad positions. A critical factor in eliminating these ad positions is mobile's exponential growth, since removing these ads provides a better mobile experience for searchers.
A recent Search Engine Watch article from Jason Tabeling, reveals how this change is already taking effect on the market. Tabeling ran a keyword level report including the Top vs. Other segment and analyzed the last three weeks prior and post Google’s change.
Below are some of his findings:
Impressions are Down
As expected, without ads on the right-hand panel there is less inventory available, resulting in a 19% decrease in total inventory, majority of the reduction coming from the “other” segment.
Position Traffic is Changing
The percent of traffic for all positions below organic listings have either increased or decreased due to inventory restrictions. Based on the data below, it appears positions 3 and 4 are gaining more impressions; however, the total % of traffic is on the decline despite positions 1 and 2 showing a major increase in traffic. These results only reaffirms how important it is to be at the highest position possible for a user’s search results.
CPCs Are Down, But for How Long?
We’re seeing a 12% increase in click-through rates, which shouldn’t come as a big surprise given more searchers are now seeing more ads. This is a win-win for Google because searchers are responding well to the new layout, and advertiser traffic is increasing. What this also means is your Quality Score (QS) is experiencing a correlative boost for this boost in CTR.
How Google’s algorithms calculate QS will always be a mystery. However, because Google is a for-profit business that charges on cost-per-click (CPC), it’s safe to assume QS is heavily based on CTR. Using that assumption in combination with the lift in CTRs, we’re seeing CPCs drop by 11%. Take this with a grain of salt, this is an early study and need to proceed cautiously when making budget decisions. How long will this pricing be valid? Since more ads are not even qualifying for impressions now, bids will increase and overtime every advertiser’s QS will eventually plateau and may drive the price of CPCs in the long term.
These early results are based on a single ad account and offer a fair assessment of the direct impact on the industry, we definitely advise analyzing your own data to identify trends within your own account. Make sure to include your Top vs Other data segments against your KPIs.
- Are you still receiving impressions for your ads?
- Are CPCs going up in certain campaigns that have higher competition?
- Does the delta in CPCs allow or restrict you from spending more in other areas?
Share your early results with us in the comments below!