Back in February, Google threw curveball at advertisers once again and decided to stop showing ads in the right side of desktop search results. Although it came as a surprise to many, this change has been in development for quite some time. Google has been engaged in some behind the scenes testing at least as far back as 2010 and began tinkering with ad placement by showing an increasing the number of top only ads. After several years of quietly testing theories out, it looks like Google has decided that this move is a commercially viable one, and moved to implement the change permanently in mid-February. Will this improve ad bidding for advertisers? After the first month NMPi takes a look at the effect this is having on advertisers.
The impact hasn’t been as dramatic as feared within the digital community, but there has been a noticeable and steady increase in first page minimum bids due to the available ad inventory dropping from eleven to seven ads per page. According to Search Engine Land, advertisers have seen a decrease in the top-of-page minimum bids for non-brand text ads because of the increase in ad inventory above organic search results has increased from three to four ads in some places for highly commercial search terms.
Russell Scott, NMPi’s Performance Director, compared the numbers from two weeks prior to the Google SERP rollout and two weeks after, “As expected keywords that now appear in positions below 4.5 have seen a large drop in traffic and clicks (-47%), CPCs also increased 15% – possibly skewed by the cheaper CPC positions 8-11 disappearing from the SERPs. These keywords however accounted for a very small proportion of overall traffic.”
Organic search has also seen some change – in some instances there is far less traffic coming via organic search, especially on highly competitor terms, as results are getting pushed further down the page. This has the greatest impact on brand terms, thereby increasing the importance of running paid search activity on brand keywords. However, it’s not all doom and gloom – bottom ads are picking up traffic, and haven’t been wholly ignored as some advertisers feared. This development has kept CPC costs down and relatively stable, and demonstrates that not all traffic has shifted to the top of the page.
The most likely scenario for why CPCs are increasing is that advertisers are compensating for ads that fell off the first page in an attempt to get them back to their initial position. Smaller advertisers voiced the most concerns as this move has been viewed as a blow to brands that can’t afford top ad placements and relied heavily on right side ads to gain some ground. Smaller advertisers may struggle to keep up as the prices steadily rise. This signals an end to campaigns that solely relied and focused on on simple keywords and text ads. Smaller brands will have to be more creative and incorporate some of Google’s under utilized AdWords features.
From our internal research we have devised a list of pros and cons for the changes to Google’s SERP.
- Ads appear more native and are harder for searchers to distinguish from organic ads, increasing CTR.
- Boost for Position 4 – this position is now above organic and can now show extensions which was previously only for the top 3.
- Higher CTR of ads in the top 4 positions, particularly for position 4 and position 3.
- Net increase in CTR of 3% across all non-brand activity since the changes came into effect.
- Higher CPCs on desktop which is the impact of less inventory. This has resulted in increased competition for the top of page positions though not nearly as bad as expected.
- Average Increase in CPCs of 5% seen across all non-brand activity since the changes came into effect.
- Detrimental for small businesses with a low position or ROI strategy as traffic volumes for lower positions decrease.
The industry consensus has been that it’s still too early to determine if these changes will ramp up and have deleterious effects, or if there is really nothing to panic about. Thus far, bidding wars have intensified but certainly not to the degree some industry watchers predicted. In addition to that fact, not all of the effects can be definitively attributed to Google SERP changes, but they are still well worth keeping an eye on.
If you want to learn more about data, dowload our guide, Turning Big Data into Smart Data.