Google Changes AdWords Ad Rank Calculation, Now Factors In Ad Extensions And Formats

Google AdWords Ad RankToday, Google announced a change to Ad Rank, its ad serving calculation in AdWords that determines where your ad shows and how much you’ll pay per click. In addition to max CPC bid and quality score, Ad Rank will now factor in the expected impact from ad extensions and formats. Ad Rank is also becoming a bigger factor in determining whether ads are eligible to display with extensions and formats.

What do these Ad Rank changes mean?

Extensions and formats now play a role in the price you pay per click and in the position your ads display.

Google wants advertisers to use all the available extensions that make sense for their businesses. “Ad extensions typically improve clickthrough rate and overall campaign performance because they make ads more useful.” Better click through rates for you mean more ad clicks for Google. The company “will do even more to automatically serve extensions in the contexts when they’re most beneficial.” Advertisers don’t have to (or get to, depending on your point of view) worry about having the right combination of extensions display for a given situation:

For example, consider someone downtown searching on a mobile phone for “auto repair.” In this example, the user might be most likely to respond to your ad when they can click to call a phone number or tap a link to get directions to visit in person. So we may show a combination of call and location extensions with your mobile search ad.

Now imagine if someone were searching for “auto repair” on a laptop computer in the suburbs. Say your ad earned the 3rd ad position above the organic results in this auction. We might show your seller rating and sitelinks because that’s the highest performing and most useful combination of extensions that could be shown with your ad in this particular auction and ad position.

In addition to serving extensions according to context, Google says it will automatically show the highest performing extensions and formats, meaning those expected to yield the greatest click through rates. [Update: this sentence has been edited for clarity, see comments below.]

Additionally:

  • When estimating the expected impact of extensions and ad formats, we consider such factors as the relevance, clickthrough rates, and the prominence of the extensions or formats on the search results page.
  • Because Ad Rank is now more important in determining whether your ad is shown with extensions and formats, you might need to increase your Quality Score, bid, or both for extensions and formats to appear.
  • You may see lower or higher average CPCs in your account. You may see lower CPCs if your extensions and formats are highly relevant, and we expect a large positive performance impact relative to other competitors in the auction. In other cases, you may see higher CPCs because of an improvement in ad position or increased competition from other ads with a high expected impact from formats.
  • For now, this update only affects search ads appearing on Google Search.

Related Topics: Channel: SEM | Google | Google: AdWords | Top News

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About The Author: writes about paid online marketing topics including paid search, paid social, display and retargeting. Beyond Search Engine Land, Ginny provides search marketing and demand generation advice for ecommerce companies. She can be found on Twitter as @ginnymarvin.

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  • Martin Röttgerding

    Hi Ginny,

    Wow, you’re quick with this post! But I believe there’s a mistake:

    “In addition to serving extensions according to context, Google says it
    will automatically show the highest performing extensions and formats,
    or those expected to yield the greatest click through rates.”

    This sounds like there are three criteria here: context, performance, and expected CTR. However, the ad auction is about giving the best spots to the ads that make Google the most money. How much money Google can make from an ad is derived from two factors: how much Google can earn IF there is a click (a.k.a. the bid) and the probability that a click actually happens (a.k.a. click-through probability, or in layman’s terms, expected CTR or just CTR).

    Google doesn’t exactly emphasize this, but those three things from above basically all mean the same. Performance is measured in CTR and considering context means considering CTR in that context.

  • http://www.itfreelancing.net/ Pankaj

    Hi Ginny,

    You said “In addition to serving extensions according to context, Google says it will automatically show the highest performing extensions and formats,
    or those expected to yield the greatest click through rates.”

    So it means we don’t have to add our extension with our ads, as Google will do it automatically for us???

  • http://www.skiusainc.com/ SKI USA

    This is good news if you look at the point of view of both people paying for ads as well as those clicking on it…

  • http://www.skiusainc.com/ SKI USA

    No Pankaj it means that you will have to ad extensions to your ad but Google will serve the extensions which it thinks is best that goes with the user query and its intent.

  • Ginny Marvin

    That’s exactly it, you still need to set them up — and probably add some you’re not already using. Essentially Google is telling advertisers to set up every extension and format that’s relevant to their businesses rather than pick and choose based on how they think an extension/format will affect performance. Google will automatically serve the extension or format, or combination, it determines most relevant to the context and intent of the query and that is expected to yield the best click through rate.

  • Ginny Marvin

    That’s exactly it, you still need to set them up — and probably add some you’re not already using. Essentially Google is telling advertisers to set up every extension and format that’s relevant to their businesses rather than pick and choose based on how they think an extension/format will affect performance. Google will automatically serve the extension or format, or combination, it determines most relevant to the context and intent of the query and that is expected to yield the best click through rate.

  • Ginny Marvin

    Hi Martin, You’re right, and what I should have written is “meaning” instead of “or” in that sentence to make that point clearer. Highest performing in this context = best CTR. Context = Relevance and determines if a particular extension will show for a particular query. Thanks for pointing that out — I’ll add an update to be sure that’s clear to future readers. Really appreciate your feedback!

  • Jaap

    Hi,

    Will this change also affect the Ad Rank of ads on the right side of SERP? So when two ads with same bid and quality are competing for position 5 will the one with extensions be shown?

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