Google's Right-Side Adpocalypse: Anatomy of a Loser [New Data]

9

It’s been about a month since Google confirmed the death of right sidebar ads for desktop search results. Immediately following the change, a hot topic of rampant speculation throughout the search industry was how much CPCs would skyrocket.

adpocalypse

Here’s just a sampling of comments on the change from Search Engine Land’s Facebook page:

“One thing’s for sure: Google wouldn’t have rolled this out if they weren’t sure they would make more money this way. Less ad-space, more earnings…you figure out what this means for CPC.”

“This will raise costs for advertisers, squeeze-out advertisers who a) can’t afford the higher competition and/or b) can’t figger [sic] out how to raise their Quality Scores, and send many advertisers to Bing/Yahoo, FB and other social-media platforms.”

“Going to raise cpc costs across the board.”

Even Perry Marshall cried “DANGER,” calling it the biggest Google AdWords shakeup in more than 10 years and warned: “Your strategy for Google AdWords is going to totally change.”

Well, now it’s nearly a month later, and the data actually shows a very different story — and by different, I mean the same. Very little has changed.

A Refresher on What HAS and HASN’T Changed

We’ve updated our data on the effects of the SERP shake-up (see full details on our data sources at the end of this post).

Click-through rates (CTRs) are up

adpocalypse ctr data

As the data from thousands of WordStream accounts spanning all industries shows, CTRs are up. No real surprise here.

It was expected that having a fourth spot above the organic results would mean more ad clicks. The surprise, as I discussed last month, was that the ad in the third spot, not the fourth, got the biggest boost from the new desktop SERP layout.

Costs per click (CPCs) are static

Here’s one dire prediction I saw on Twitter: “No right side ads = hello 3x increase in CPCs.” Many marketers feared less ad space would result in CPCs going through the roof.

mass hysteria

Well, this is why smart marketers don’t base their strategies on predictions. Because the data tells the actual story:

adpocalypse cost per click data

CPCs haven’t jumped, let alone by 3x. If anything, CPCs have gone down some, as shown in the chart above.

Traffic is steady

More good news for PPC marketers: click volume, for the most part, has been steady. There have also been some modest wins:

adpocalypse click volume

So we’re looking pretty good, right? CTRs are up, and clicks are mostly constant. Does that mean impressions are down?

Impressions are down

Before the change, it was possible for searchers to see up to 11 ads per search results page. Now, after the removal of right-side ads on desktop, Google users will see no more than seven text ads.

So yes, this change has resulted in a decline of ad impressions. The loss of desktop impression share mostly affects those who appeared in the eighth position and lower:

adpocalypse impression share data

Although this chart may look kind of catastrophic for those below position 7, it really isn’t a huge change. Why? Because positions 8–11 made up a mere 0.2 percent of all desktop impressions:

share of ad impressions

A quick note on averages

There has been some noise lately about how averages don’t tell us anything useful for strategy in PPC because every advertiser is different. I disagree. As long as you’re using proper math – checking the sample variance and standard deviation for your data set to make sure the variance isn’t too high – averages can tell you lot, because the vast majority of advertisers will fall into the standard distribution. More on this here.

Anatomy of a “loser”

Every change to the Google SERP has winners and losers. If a win in this case means higher CTRs, lower/steady CPCs and steady/more traffic, what does a “loser” look like?

In an effort to provide a thorough analysis, we set out to find examples of accounts that truly suffered as a result of Google’s removal of right ads from the desktop SERP.

It wasn’t easy. After poring through tons of accounts and data, however, we finally managed to find an interesting example from the financial industry. So let’s take a quick look at the “struggles” of one advertiser.

Prior to the change, they had an average position of 8.6 on desktop. After the new SERP rolled out, they got killed, losing 80 percent of their desktop impressions:

impression share after adpocalypse

But here’s where it gets interesting. Their CTR more than doubled:

post adpocalypse ctr

As a result, the advertiser only lost 15 percent of their desktop clicks, which fell from 26 to 22:

desktop clicks 

Also interesting is that this advertiser saw CPC increase from $0.53 to $0.69:

cpc increase

But wait! It gets even more interesting, because their average position went from 7.5 to 4.3 after the change.

average position data

So, overall, not a terrible deal for this “loser.” This advertiser is now paying $0.16 more per click, but it’s for vastly more valuable space on the SERP.

The fact that an advertiser with an average position of 8.6 didn’t get wiped out — especially considering Google eliminated ad positions 8 through 11 from the SERPs — is of major significance.

What does it mean? Well, it leads me to believe that Google is sharing the impressions a little bit, as opposed to using a “winner takes all” approach.

Don’t believe everything you read on the internet

Okay, so here’s what we now know about what was overhyped as the most dangerous change Google has ever thrown at us:

  • Most advertisers are responding well to the change.
  • Advertisers’ metrics seem to have mostly balanced out so far.
  • Traffic and CPCs have remained relatively flat.
  • The losers are those who were at the bottom (positions 8–11). But even then, it’s nearly impossible to find examples of advertisers that have been totally and utterly annihilated.

Finally, it’s important to remember that this change is exclusive to desktop. Regardless of how you spin the numbers, it’s clear that desktop is becoming less of a focal point for Google:

mobile vs desktop clicks

Remember, brave search marketers: The only thing we have to fear is uninformed speculation. Don’t panic whenever Google changes something. Be patient. Collect and analyze your data. React smartly.

This wasn’t the first huge change we PPC marketers have lived through. And it definitely won’t be the last!

Data sources:

This report is based on a sample size of about 2000 client accounts representing SMBs in all verticals in English-speaking countries worldwide (including the United States, Canada, UK, Ireland, Israel, Australia, and New Zealand), advertising on the Google AdWords search network (desktop only) in the date ranges indicated on the charts.

A version of this article appeared originally on Search Engine Land. It is republished with permission.

Find out how you're REALLY doing in AdWords!

Watch the video below on our Free AdWords Grader:

Visit the AdWords Grader.

Comments

Dexie
Mar 24, 2016

I see similar trends in my accounts but the drop in CPC is baffling. What is the cause of this? Is Google lowering their prices to sweeten the pill or are there other influencing factors?

Blake
Mar 24, 2016

Did the example in "Anatomy of a loser" make changes to their account during the time-period that will also cause effects? Like increasing their CPC? Thanks.

Shirsendu
Mar 25, 2016

So its mean that we will lose a big percentage of serp impression but in other hand we can be rest of sure to have a very good CPC for sure. So its mean this is the high time when we optimize our title and meta description absolutely perfect for the readers, what is your point on this Larry ?

Gianpaolo Lorusso
Mar 26, 2016

Thanks Larry,
I got the same results.
Have you disaggregated data for average positions 1 to 3 and over?
You will probably find that the average global data is standing still, but the higher your ads average position is, the bigger was the impact of this innovation.
Have a look here: http://www.adworldexperience.it/en/the-first-real-data-about-adwords-side-ads-switch/

Finally, I totally agree with you on the ads rotation algorithm Google is now using in Ads. Probably they are now using the same both for mobile and desktop serps.
Ciao :-)

Corey Zeimen
Mar 27, 2016

I have noticed a similar dip in search impression share for my clients.

To get more impression share, you need to bid more now, quite a bit more.

allan
Mar 29, 2016

awesome data. Google constantly looking to improve. i think they made a good decision with this one.

Frank
Mar 29, 2016

Maybe that is the data your trends are showing but we quit Google AdWords all together last week with a $5,000 a month budget. Our ads went from just under $2 per click to $14 per click in the month since the change.

dave m
Mar 31, 2016

I manage a Google Ad Grant account for a charity. Our impressions and clicks have plummeted. We no longer come close to our daily budget due to the $2 bid limit. Google's elimination of the side ads has destroyed 90% of the value of Google Ad Grant program for us.

qadim
Aug 19, 2016

You will probably find that the average global data is standing still, but the higher your ads average position is, the bigger was the impact of this innovation.

Leave a comment