Google Ad Rank Study: How The New Formula Is Impacting AdWords Performance

In October, Google changed its Ad Rank formula which determines the position order of AdWords paid search ads. The revised formula now factors in the expected impact of ad extensions and ad formats, in addition to the bid and quality score. The Search Agency has released its latest findings on the impact of this significant change.

The Search Agency looked at roughly 3,500 campaigns across a large client set and isolated preexisting ads that included one of the following ad extensions: location extensions, call extensions, review extensions, offer extensions, app extensions, or sitelinks, to compare them with the overall ad performance of those advertisers.

The team looked at the performance of the two data sets for the two weeks before Google implemented the Ad Rank change and two weeks after the implementation

“Points to ads with extensions possibly being served more often.”

What The Search Agency found is that, on the whole, impressions and clicks for ads with extensions improved significantly after the Ad Rank change: up 6 percent and 5 percent respectively. Overall, when looking at the performance of all the ads, impressions actually fell 6 percent and clicks were off slightly by 1 percent.

While the click-through rate (CTR) for ads with ad extensions fell 1 percent after the Ad Rank changes went into effect, the CTR remained much higher for ads with extensions. Overall the CTR for ads with extensions was 4.07 percent, compared to 1.82 percent for the control group of all ads.

“It’s important to note that our study is not drawing a causation between revisions in Google’s AdRank formula and changes in click-through rate. The decrease in CTR across periods was relatively small—only about 1%. What we found more significant was the large jump in impressions and clicks, which points to ads with extensions possibly being served more often,” said Matt Grebow, director, search media at The Search Agency.Ads with location extensions, in particular, saw dramatic improvements after the Ad Rank changes went into effect. Impressions for ads with location extensions rose 50 percent, clicks jumped 95 percent, CTR rose 40 percent and the CPC fell by 32 percent at the end of the post-change period.

“Overall, ads that include ad extensions garner a significantly higher CTR than ads without. That said, advertisers need to consider which types of extensions make sense for their brand. We always encourage our clients to test, but we also advise them only to opt into search products that are compatible with their marketing objectives,” says Grebow.