Google Announces Updates to AdWords Ad Rank Algorithm

Google quietly announced that they are updating their AdWords Ad Rank algorithm in order to incorporate some of the newer features they have added this year. The major focus of the updates involves one of their newer features released earlier this year – ad extensions. The improvements, according to Google, are meant to “let [Google] more consistently show the relevant ad extensions and formats.”

Improvement Details

Ad Extension Performance as an Ad Rank factor

Before the update, Google calculated Ad Rank by taking into account your max CPC bid and your Quality Score. The latest update adds a third component for Google to consider: the expected impact from your ad extensions and formats. This means if your ad has the same bid and quality score as another ad, your ad will receive the higher ad display position if you have an ad extension that is more likely to perform.

Google AdWords’ ad extensions now play a role in determining the display position of your ad in Google Search networks.

The impact of the ad extensions are measured based on the following:

  • Relevance
  • Clickthrough rates
  • Prominence of the extensions / formats on the SERPs

Ad Rank to Determine the Appearance of Ad Extensions

Google also explained that your Ad Rank will determine if Ad Extensions will appear. Working on improving your quality score, increasing your max CPC bid, or combining both may mean ad extensions will appear when you create a new or modify your existing ad campaign.

Ad extensions may only appear if you increase your quality score, your maximum bid, or both.

Choosing what extensions to use once it appears won’t be a problem as well. Google will show you what extensions and format combinations are most likely to perform among those eligible. This update is meant to help you achieve the most clickthrough rates using their ad extensions feature.

Lower CPCs and Higher CTRs for Ads with Extensions

Finally, Google announced that users may see higher or lower average CPCs based on whether or not you are using ad extensions and formats, and on what extensions you are using. Ads using relevant extensions and formats may see lower CPCs and higher clickthrough rates. Meanwhile, you may see higher CPCs if your ad position improves, or if your competition is using ad extensions that are more likely to perform.

What this Means for You

Google has pushing the use of ad extensions in your AdWords campaigns since its launch earlier this year. These updates make the extensions necessary if you want to get better ad placement. In addition, because the appearance of ad extensions vary based on your quality score and CPC bids, you can see Google pushing for quality ads as well. Improving your copy and leading your audience to the relevant landing pages increases your quality score and helps Google select the right ad extensions for your campaign.

Note that Google automatically selects which ad extensions are appropriate for your ad campaigns based on their performance. The updates also affect only search ads in the Google Search network – the Display Network is not yet affected by these updates. Make sure to read Google’s announcement to view their recommendations for using extensions.

We’d be happy to help you integrate ad extensions to your current AdWords campaigns. Talk to our digital marketing agency today to get started.

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