Right hand side ads – nine months later
All the way back in February, Google rolled out the culmination of a 6 year test to their ad layout – bringing their desktop search results page in line with the mobile experience.
Included in this overhaul was the removal of adverts from the right hand side of desktop search, and the addition of an additional advert in the top ad-pack for ‘highly commercial queries’ – bringing the total to four instead of three.
Highly commercial queries are exactly as they say on the tin, anything highly commercial. We’ve seen the fourth ad position appear for highly competitive terms like “hotels in London” and “bad credit loans”.
Now that the change has been rolled out, the only way that ads will appear on the right hand side is in either Product Listing Ads (PLAs) or in the Knowledge Panel.
What did we think would happen?
When the news broke, we made some assumptions about what we thought would happen from here – as all SEMs did.
Firstly, we assumed that any terms we needed to rank at 1-4 would increase, both in terms of CPC and CTR. We expected these effects on CPC to be more pronounced on highly competitive and generic terms, especially in more aggressive verticals such as finance. More people would want to be above the fold, so it made sense that people would be increasing their budgets to get into those competitive top positions.
But we also held the reverse to be true. Any queries appearing in positions five to seven would see reduced CPC, as well as reduced CTRs, because they would be shunted to the bottom of the page.
We also assumed that brand queries would strengthen. There would be less competition above the fold, so surely the brand CTR would increase too.
Nine months later
It’s been 9 months since Google rolled out this change, but what effects have we seen? We looked at data from across our clients and analysed whether our predictions were correct.
CPCs didn’t change much
We focused on desktab data (desktop + tablet = desktab) from all our accounts, as mobile already has no right hand side ads. We didn’t see much of a change in CPC or CTR across our clients when we combined all their data together.
There was an initial spike around February, as SEMs across the industry reacted to the changes to the ads and scrambled to adjust their budgets, driving CPCs up. However, this spike soon levelled off and returned to a similar level.
We also analysed data from across our finance clients, to make sure we weren’t missing something. These financial clients deal in very niche products which do not overlap, so there was no seasonality when we combine all their data, giving us a clearer picture of what is actually happening.
The increase in CPC was more pronounced in the finance sector data, as finance is a very competitive vertical. Typically financial clients have more money to burn, so the increase was higher as they all increased their budgets in order to ensure that they get into the top three or four positions.
However, after a few months, we saw that the CPC soon dropped back to more or less the levels they were before – if we exclude the Christmas rush.
Competition for the 3rd position
An interesting highlight came from one of our retail clients. For this client, we have a target average position across all their terms for 3.0. This client does not operate in a highly competitive vertical, so there was no danger of a fourth position appearing for these queries. Therefore, they were the last ones above the fold.
While we all know position 3 is a highly contested position – due to it being the last one above the fold – we analysed their CPC and CTRs since the update, and we have seen a steadily increasing costs across both.
As the 3rd position is now the last position above the fold, and there are no right hand side ads to compensate for this, the price of the competitive 3rd position has steadily increased over the year.
This was the account we saw the biggest change to, due in part to their strategy.
So, were we right?
Kind of. We did see an increase initially across our competitive verticals, particularly finance. However, these soon levelled out as the market stabilised after the changes.
We have seen increasing costs for position 3 however, particularly in verticals which are not highly competitive. Businesses will need to spend more in order to appear above the fold, but it doesn’t seem like the CPCs have increased that much, so there’s no need to rush out and ask your boss for a substantially increased PPC budget just yet.