You’ve probably heard a lot about Google’s move to eliminate the right-column in the last few days. Here is my take on what is changing and what it means for your search programs.
Google will remove right-column text ads on desktop search results, including search partners, by Wednesday, February 24th. A fourth text ad will be added above the desktop organic listings for “highly commercial queries” as well. Note that product listings ads and the Knowledge Panel will still exist on the right-column.
What are highly commercial queries?
The phrase “highly commercial queries” is vague but Google stated that this will equate to approximately2.5% of queries. Moz.com reports that the percentage of queries with Search Engine Results Pages (SERPs) that have four ads top-of-page is at 36% as of February 23rd. This discrepancy is the one of largest unknowns and variables of this announcement.
Even more important than the percent of queries affected is the percent of impressions driven by these queries. Queries are unique words/phrases that are searched on a search engine and some are searched more often than others (e.g. “women’s jeans” vs. “gap jeans sizing chart”). We believe that the ratio of queries to impressions may comply more with the Pareto Principle (80:20 rule) leading to an even bigger impact.
What will the impact be?
Higher CPCs on desktop: Basic economics states that with a reduced supply of impressions available to advertisers and no change in Google search volume (demand) there will be a rise in CPCs. The total number of text ads that appear on a SERP will decline from as many as 11 to a maximum of seven. In the short term there will be CPC fluctuations as advertisers test new strategies and bid management platforms work to replace lost impression volume. Higher CPCs should stabilize in the next month.
Shift in click-share:
Non-highly commercial queries: The absence of right-column text ads will shift traffic evenly to other links on the SERP (paid, organic, PLAs) for searches that don’t trigger a fourth text ad. Right-column and bottom-of-page text ad desktop traffic represents 10-30% of non-brand clicks for Ovative clients across Google and search partners. This change will have a significant impact on non-brand keyword volume as that traffic shifts away.
Highly commercial queries: The addition of a fourth text ad at the top-of-page will lead to a shift in click-share amongst the SERP as well. Top-of-page text ads typically have 10-20X higher CTR than right-column and bottom-of-page ads. This means that although right-column text ad traffic will be lost, there will be an equal if not greater click gain from the fourth top-of-page text ad.
Increased text ads at the top-of-page also means a decline in organic traffic. In August 2015, Google began to display three, instead of two, text ads above organic listings on the mobile SERP. This change led to ≈40% growth in Google paid traffic from mobile phones and a noticeable decline in organic traffic. Now, text ads completely dominate above the fold on mobile so this device would likely see a larger impact than desktop. Text ad click growth won’t be as dramatic on desktop but still significant and at the expense of organic.
What should be done?
This change will impact most advertisers’ bottom lines but here are some ways I recommend adapting to this new environment:
1. Optimize bid adjustments on AdWords:
Many advertisers take a conservative or passive approach to AdWords bid adjustments. Become more intentional with location, demographic, time-of-day and audience bid multipliers. Take advantage of historic performance and customer data to reduce spend on poor-performing traffic. Remember that the keyword is only one indicator of a user’s likelihood to purchase.
2. Increase optimization efforts on product listing ads (Shopping Campaigns):
PLAs will make up a larger percentage of above the fold ads after this change is complete. There won’t be the same initial rise in CPCs as text ads making them relatively more profitable. This will lead to a shift in traffic to PLAs which already make up 40% of Google paid clicks. Confirm that an optimized product feed, robust product group structure, and proper Shopping Campaign priority settings are being utilized.
3. Develop a strong, integrated SEO strategy:
The combination of SEM costs likely rising and more clicks going to organic reinforces the need to have a robust SEO program in place. Make sure that teams or agency partners have a holistic view of the search landscape and an integrated approach to optimizing paid text ads, product listing ads and organic presence to yield the greatest scale and ROI.
4. Improve quality score:
Text ad position is a function of keyword bid and quality score. An actionable way to offset rising CPCs while maintaining the same position is to improve keyword quality scores. The basics of quality score improvement involve creating targeted, high CTR ads and using landing pages with relevant content and quick load times. Check out Google’s guide on measuring and understanding quality score.
5. Enterprise measurement:
Now more than ever advertisers will need to understand the enterprise impact of their SEM budgets. Are you incorporating cross device, online to offline and new customer acquisition insights into your bidding strategy? If not, you are likely not optimizing your program to enterprise return on ad spend. For more on this topic, download our whitepaper on online-to-offline measurement.
What’s coming up?
The next few weeks will be exciting as search marketers figure out how to best optimize to this sudden SERP transformation. This change will diminish paid search ROAS which means it’s important to monitor performance and keep spend fluid between ad types and channels. Focus on changes to CPCs, impression share and total impressions as those will be the most impacted metrics.
Ovative will be keeping a close eye on the impact this has across our clients and will post an update in a couple weeks! If you have questions or concerns please contact me or any Ovative team member and we will be happy provide further clarity.