POV

Ad Rank Gets a Revamp

Ad Rank

Background

Ad Rank has been a fairly steady metric over the years – it determines your position on Google Search by multiplying your bid by the Quality Score of each keyword. Quality Score is, of course, Google’s way of measuring relevance of the keyword/ad/landing page experience. So, in the end, it’s how much you’re willing pay times how relevant you are.

Yet, Google has been busy experimenting with new ad units and extensions to ads that include product images, +1s, location of stores, deep links to specific pages, and many more. The goal is to provide a richer, more relevant experience directly on the SERP and go beyond just displaying text links to users.

To better account for these ad innovations, Google is now including them in the Ad Rank equation. They’re doing this by looking at the “estimated impact” of the extensions and formats on your ad. Google’s press release states, “When estimating the expected impact of extensions and ad formats, we consider such factors as the relevance, click-through rates, and the prominence of the extensions or formats on the search results page.”

AdRank UpdatesSo, if two ads are fighting for position 1 in the search results and one of them has a historically higher-performing extension such as site links, that ad may win out over the other. It is also important to note that this impacts Google Search results and not their partner sites at this point. Google will also determine which of your extensions should show based on the context of the search – for example, a search done on a query such as “hotel downtown chicago” may display different extensions on a mobile device than it would on a laptop.

Resolution POV:

The experimentation with new ad units in Google is definitely great for advertisers who are looking to make more substantive connections through search. There are plenty of worthy applications: image extensions provide visualizations for hotels and restaurants, location extensions connect people to the nearest retail store, the upcoming Google+ “shared endorsements” will soon bring in users’ social reviews/ratings to search ads, etc. If these extensions are used strategically to enhance the brand experience, they can be of great benefit to advertisers. Therefore, it makes sense to bring them into the equation for ad ranking.

What this means:

  1. Bid to top positions: There will be more emphasis on bidding to “above search results” positions, which are of course typically more expensive. This is because most extensions only show in top positions. So in effect you’re paying more to get more exposure in top positions, but also potentially providing a richer experience because of these extensions. The net effect may be that overall CPCs may rise because of the pressure to target top positions, but advertisers can lessen any cost increases by ensuring they have highly-relevant extensions.
  2. Leverage ad extensions: There are very few, if any, reasons to run ads without any ad extensions at this point. Google has provided many options available in AdWords and is testing even more in beta that provide an improved experience, and clearly they feel that all advertisers should be using them. We agree.
  3. Optimization has to take a higher priority: Pay more attention to and optimize your ad extensions and formats. If you’re a retailer and not yet running on Product Listing Ads, you may suffer on specific product searches (“canon rebel t3i”) if Google is seeing that those formats are driving clicks at a higher rate. Also, if you’re running site links that are extremely low-performing in terms of CTR, it may signify that the links aren’t relevant to people searching on your terms and thus Google may give you a lower Ad Rank than another advertiser with more refined site links.
  4. Stay informed: On updates and new releases ad units and extensions, because it will now be even more important to stay on top of new search experiences that drive engagement. Those that don’t could end up paying more.

Summary

Google will undoubtedly continue to experiment with ad extensions and format — some of which will perform better than others — with the end goal of making search advertising experiences are more relevant. Because of this, it not only makes sense to place more emphasis on them in calculating Ad Rank but also for advertisers to ensure that they’re prioritizing them moving forward.