Google’s increasing its advertising costs
Last week, on Friday 19th February, Google rolled out a change to its search results page layout which many industry commentators have suspected for some time. Previously, for highly competitive and commercial queries there was a small chance of additional ad units appearing, but this move brings with it the removal of the right sidebar for many more.
What happened in this update
Google has begun to remove the right sidebar, linearising the page into the one column layout, similar to the one-column mobile layout. Many industry commentators have suggested this is the reason, but we think the reason is a little more commercial…
Now, the right hand sidebar is almost exclusively reserved for knowledge graph results for brand searches (where ads usually don’t show anyway), or product listing ads (PLAs) for product-driven searches.
Also, Google has created a few additional ad spots at the bottom of the search results page after the ten organic results, much like on mobile. This is to replace the lower positions previously found towards the mid-bottom right hand side.
Does this make sense?
Completely. Google makes almost 90% of its revenue from AdWords so by optimising its ad inventory then it can make more money for its investors by taking more from advertisers. Ads placed on the right hand side typically saw much lower click through rates than those placed at the top of the page. For example, look at the difference in the click through rates (CTR) in the screenshot below: 7.45% vs. 0.81%.
By moving the fourth result from the right hand side to the top of the page, the ad revenue from position four will increase drastically. And by adding in additional ad spots following the 10 organic listings, Google’s likely to retain or increase the number of ad clicks found from non-top of page ads anyway.
What this means for advertisers
This means cost increases for advertisers. It’s simple supply and demand — Google is restricting the above the fold supply of ad inventory, so price will face upwards pressure and more advertisers will be priced out of the auction. Some advertisers may also now be planning to bid even higher and as a result, due to the way Google runs their auction, this may artificially inflate the auction price.
This means advertisers need to be more careful about their pay per click strategies. A properly managed campaign can still deliver unbelievable digital marketing results, so ensure you have a PPC expert look over your efforts.