1. New Google
AdWords Ad
Rank Formula
Whitney Smith
& Chris Lyon
1st November
2013
Background
Google has changed its Ad Rank formula, which determines the order in which competing paid
search ads are displayed on the SERP (Search Engine Results Page). In the past, an ad’s position on
the SERP was dictated by a combination of two factors: Max CPC Bid multiplied by Quality Score.
Google is now incorporating the use of ad extensions into the Ad Rank calculation as well. Ad
extensions, which are visual enhancements to advertisers’ search ads, such as location or social
annotations, are taken into account if two competing ads have the same bid and quality. With this
new calculation the ad with the more positive expected impact from extensions will appear in a
higher position.
The change has been brought in under the umbrella of creating a more relevant ad experience for
search users.
Implications/details
Having extensions and more engaging ad formats has shifted from being a “nice to have” to a new
standard for advertisers to maintain their strong presence and visibility. The new Ad Rank
calculation is impacting all accounts opted into the Google search network. Brands need to
understand some of the key implications this change will have on ads, in order to continue to have
successful campaigns.
Even if advertisers currently have ad extensions, they aren’t necessarily in the clear: While an
advertiser may already have Ad Extensions as part of their campaign, if Google does not deem them
as highly relevant to the consumer’s search, Ad Rank is expected to be low. With that said,
advertisers not using ad extensions can expect lower Ad Rank as part of this change.
Anticipate changes in your CPCs: Ad Rank is now more important in determining whether your ad
is shown with extensions and formats, so brands may need to adjust their bid, improve their
Quality Score, or both for extensions and formats to appear in search results.
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You may see lower CPCs if your existing extensions and formats are highly relevant
In other cases, you may see higher CPCs because of an improvement in ad position by a
competitor or if new competitors with ad extensions enter the marketplace
Organic listings move lower down the SERP: Ad Extensions create larger paid search ad formats,
which consume more space on the SERP. As more advertisers opt into these extensions, we can
anticipate organic listings will move further down the page. The result being that consumers may
begin clicking on paid listings more frequently, as these units will own the prime real estate ‘above
the fold’.
Summary
Advertisers have always been encouraged by Google to leverage ad extensions, now it has become
essential to running a successful campaign. Advertisers should focus on improving their
consumer’s journey in search, while strategically deciding which extensions make the most sense
for their business and business goals (to create that positive affinity Google now requires) and
update their campaigns as soon as possible.
Advertisers also need to closely monitor their CPCs and Quality Scores. Whether they have existing
extensions or not, these changes to Ad Rank will impact their business and there will be a need to
incorporate and adapt to this significant change in paid search advertising.