As someone who manages a large monthly AdWords spend, I keep a close eye on changes and developments to the product. I noticed a few weeks ago that Google was testing a new display format for desktop based searches. Instead of displaying the usual three ads at the top and eight ads on the right hand side, the test page now had four ads at the top, none on the right hand side and three at the bottom.
Initially I thought this may have been a glitch in the matrix so to speak but after several weeks of seeing this sort of result and an increasing percentage of search terms producing it, it was confirmed to me.
If confirmed this is a significant move by Google. Advertisers who were competing for between ten & twelve above the fold ad slots are now competing for only four.
On the face of it this appears an odd move by Google. For years now they have pursued a strategy of squeezing more and more ad space onto their search result pages. Additional ad units, additional ad units above the organic results, site links, site extensions, call out extensions and user ratings, to name a few, have pushed more and more of the real estate from organic results to paid results (the ones Google makes most of its money from).
So why then have Google suddenly decided to dramatically reduce the number of above the fold ad units on the page? I am expecting the official line to be something along the lines of improving relevance for the user, bringing desktop pages more in line with mobile pages and to allow more space for new ad units such as shopping or comparison widgets. Call me cynical, but I don’t think these are the reasons at all.
For a while now I’ve had a theory that the value of traffic sent via Google paid search has been dropping. Although this is very hard to test given how many other variables can impact the ultimate performance of a campaign working in Lead Generation has allowed me to see the general performance of leads derived via Google over a large number of products and campaigns.
My basic hypothesis is that the ads and the real estate given over to ads has become so prolific on Google’s search engine result pages that consumers with no real commercial intent or at least who were a long way short of a transactional mindset have effectively been forced to click ads for want of more relevant organic results. This has resulted in more clicks on ads, great for Google’s bottom line, but less engaged visitors and a devaluation of the actual traffic being sent for advertisers.
Another strategy Google has adopted over the last four or five years is championing the cause of the “Big Brand” (also big advertisers). Since Google has taken this route it has become almost impossible for small businesses to appear in the top 10 organic results for competitive commercial search terms. It looks like, with the introduction of this change, Google wants the same thing within its paid search results.
Unsurprisingly, this change is aimed at growing Google’s bottom line. Increasing the amount of real estate given over to ads, Google’s strategy over the last four to five years, has worked well but has reached, and arguably passed, saturation point. They need to try something new to continue growing revenues and this is clearly it.
Google’s new strategy appears to be to dramatically lift competition between advertisers in the hope of inflating the cost per click advertisers pay. AdWords advertisers are now competing for four above the fold ad positions rather than ten to twelve. This is highly likely to push click prices higher and push small advertisers out of the market. At the same time Google has placed a fourth ad unit above the organic results and created a search result page that’s arguable even more focused on ads than it was before. Even though there are less of them the top half of the page (the bit that matters) is almost entirely dedicated to them.
Time will tell, as far as I know Google is yet to announce this change officially but I cannot see the change, if confirmed, being to the benefit of the advertiser or the consumer. Advertisers can expect to pay more to drive the same traffic they did before and the consumer can expect less choice due to smaller advertisers being squeezed out of the market.