Google has unleashed significant updates to its AdWords algorithm since the beginning of May and we're starting to see some impacts on the campaigns we're managing for our client partners.
Ad Rank Calculation Changes
Primarily, these updates are redefining how Google Ad Rank is calculated. As a result, where ads actually display — and how much they cost — is undergoing a major shake-up. Historically, the order in which ads are displayed at the top of a Google search results page has been dependent on four known factors:
- The bid amount
- The quality of the ad itself (show likely it is to be clicked)
- The quality of the website/landing page
- The quality of the correlation between the keyword, the ad, and the landing page
All four of these factors will continue to play a role in Ad Rank, but Google is intensifying the value of the bid amount within its algorithm. This is fantastic news for advertisers with deep pockets, and potentially bad news for advertisers with more modest budgets.
We have a solid track record of success at enabling modest advertisers to outrank a competing advertiser with deeper pockets. With very attentive management and carefully crafted ad and landing page content, we can achieve a high Quality Score and rank high in the ad results. As bids become more prominent in determining Ad Rank, however, this scenario is going to occur less frequently in the future.
We have already seen, and will continue to see, these changes drive up bid amounts over time ‚ especially in industries where advertisers have the deepest pockets and the most to gain from AdWords. The advertisers and agencies who are quickest to respond will likely see potentially strong results short-term. As others catch-up, though, average cost-per-click (CPC) will rise and competition will fierce.
Ad Rank and the Meaning of Queries
Another notable change as part of the Ad Rank update is around weighting of the type of content being advertised. In other words, Google is now taking context more into account when ranking. Content such as recent news, for instance, might be ranked more highly than a product for a relevant query, which makes sense and is a welcome change for anyone with a highly relevant or timely offering.
Timeline of Changes
It appears these updates are still rolling out over the course of May and we'll keep tabs on how this globally will impact the companies we work with. As with everything Google, changes like this often appear with little to no notice, and the changes contained in algorithm shifts are seldom 100% clear. In this update, however, Google has been fairly specific about what they're doing and why they're doing it.