Disclaimer: Full analysis and writing of this post was conducted by Jeff Rothe, Pam Ann Marketing’s Senior PPC Strategist.
On February 19, 2016, Google released an update that changed the way Google ads, (AdWords) are displayed in Google search. Google has a habit of recurring changes or adaptations to paid search, so this came as no surprise. Google claims this recent update was to create a better user experience. We’re skeptical.
Historically, Google ads had real estate on the top of the page and the right sidebar column, with some lower ranking ads showing on the bottom of the page as well, but this new update completely removes the sidebar ads in favor of an extra ad in the top results.
The old “top three” ad positions were always the most desirable, but ranking below position 3.0 on the first page was still justified because of the sidebar ads. Where there used to be almost a dozen available ad positions on the first page, there are now up to four available slots above organic results, with up to three additional ads showing below organic rankings.
With the top four ads now dominating the majority of visibility in Google search, advertisers ranking at the bottom of search results are missing out on prime search real estate. Due to fewer first page available ad positions, we hypothesized that higher competition for top page ad positions would result in an overall increase in click costs. Over the past few months, our PPC (pay-per-click) department put this theory to the test with many of our own accounts.
What did we find? Well, not much. We evaluated a blend of accounts including nationwide and local, and included accounts at multiple different ad spend levels. Results are shown below.
Account 1: Small business coach offering online coaching services to a nationwide audience.
CPC (cost-per-click) peaked at $8.07 in January, but has since decreased every month and is now at an all-time low of $4.85/click. Average ad position has remained constant since November with no significant fluctuations. These results make sense. Google’s algorithm rewards a higher CTR (click-through-rate) with better ad positions and lower click costs. By filtering out waste and refining the account, the avg. CPC has decreased and average ad position remains unchanged.
Account 2: Local New Jersey B2C.
Since November, no significant change. CPC has decreased slightly, but CTR fluctuates and average ad position is about the same. We have been managing and optimizing this account for some time, so consistent month over month performance is to be expected.
Account 3: Nationwide e-commerce in an extremely niche market.
CPC went up. A lot. Yet average ad position stayed the same. Maybe we finally have our first example of higher CPC’s? Not so fast.
Notice the extreme changes in click volume through the beginning of 2016. January had the fewest amount of clicks by a large margin because it is their slowest seasonal month, and traffic has been increasing steadily ever since. This is a seasonal account that is getting into its peak season, which explains the higher volume of impressions and clicks. Our experts predict click costs increase this time of year because of more aggressive market competition, not Google’s update.
Account 4: Local New Jersey Service Business.
What an enigma. Our team took over this account mid-February as evidenced by the massive change in monthly impressions and CTR. In six short months, the average CPC has increased a full dollar, which correlates with an avg. ad position increase of 1.2 spots. We re-built a substantial amount of content and applied strict keyword filters to eliminate all the impression waste. This strategy did achieve an 884% increase in CTR from February to March, but also created a sizeable increase in CPC. In this one instance (and without more data), it’s very difficult to determine if Google’s update has much to do with the increased CPC. From our perspective, it mostly looks like we are just paying for better ad position. If CTR continues to increase, we could even see either a decrease in CPC or higher ad rankings over the next few months.
Account 5: East coast e-commerce selling both B2B and B2C.
We launched this account in December of 2015 with good CTR, average ad position, and a $2.64 benchmark CPC. Since then, all metrics have improved. April’s MTD performance is notable because CTR increased, but CPC and ad position have admittedly decreased. However, these are minor changes and it wouldn’t be valid to draw final conclusions partially through the month. A 10.74% CTR is exceptionally good, and Google’s ranking algorithm is highly likely to continue showing these ads in the top positions for this reason.
After five account examples, what can we conclude? Still not much. Google’s AdWords update does not appear to be having any statistically significant impact on our accounts. Despite fewer available ad positions on the first page, some of our accounts are actually pacing to have a lower month over month CPC. Maybe Google’s update really was designed with better user experience in mind. Maybe our PPC department rocks. Only time and more data will truly tell. Till then, happy bidding!
PS: Our PPC department rocks.