The Google AdWords market, like the real estate market, is built almost entirely upon the foundation of location, location, location.
February 18, 2016 was the equivalent of redrawing the map.
Google Ads Shakeup
Google is now displaying four ads at the top of the search results page instead of three. Notwithstanding other events, this news alone was the equivalent of a 9.0 earthquake in the eyes of seasoned AdWords advertisers. However, the shake-up was compounded further by the additional revelation that ads populating the righthand side of the screen have been axed into oblivion as well.
"Killing side ads was equivalent of a 9.0 earthquake in the eyes of seasoned AdWords advertisers." (CLICK TO TWEET)
For now, these changes only affect queries that are deemed "highly commercial." However, it is an incredibly safe bet to assume that all queries will eventually join rank. How safe of a bet? Safer than a Lebron James dunk or a Game of Thrones plot twist.
Why Change Search Ads Now?
What is Google's motivation behind these changes? The answer, as always, is that Google has identified a pathway for increasing revenue that can simultaneously (and somewhat reasonably) be spun under the crafty illusion of creating a better user experience.
Simply put - Google wants to make money and these changes are the subterfuge to enhance that effort. Here's how:
The first piece is incredibly obvious. By displaying four ads at the top of the screen instead of three, Google significantly increases the odds that an ad will be clicked. As an added benefit, this maneuver also contributes to the ongoing slow death of SEO by marginalizing organic rankings and pushing them farther below the fold for highly competitive queries. Consequently more businesses may consider abandoning or de-emphasizing SEO as a viable strategy and refocus their efforts instead on paid search. More advertisers = more competition = higher bids = more money flowing into Google's coffers.
Image courtesy of searchengineland.com
Perhaps less obviously, the elimination of ads from the right-hand column means there will be no more moral victories for advertisers who are outbid by their competitors. No longer can an advertiser argue that an average ad position of 6.3 is acceptable because the ad "is still displaying above the fold.— Not appearing in the top-4 is the equivalent of not existing. Therefore, advertisers who were previously bidding conservatively will be forced to abandon that approach and elevate their bids.
Not surprisingly, Google is spinning these changes as beneficial to its users. Cleaner pages, fewer total ads above the fold, etc., are the common arguments in its defense. In reality, though, that is merely the sugar that gets the medicine into our system.
Advertisers Must Adapt
What is the moral of this story? Like the house, Google always wins. Advertisers will now face increased competition in bidding, which inevitably will result in higher CPCs and consequently lower CPAs.
There is no sympathy in Google AdWords. Only adaption or death.