Last month, Google announced  the release of a major change to its AdWords Ad Rank algorithm.  This is Google’s proprietary algorithm that determines the order/placement of the paid search ads on each Search Engine Results Page (SERP) as well as how much advertisers pay in the ad auction.  To learn more about the “Ad Auction” please refer to this previous article.

To summarize Google’s update, it looks like Google will now consider Ad Extensions as one added factor in determining the Ad Rank.  If you remember, up until now, the Ad Rank was the result of two primary factors: your Max CPC (or the max amount you were willing to pay for each ad click) and the Quality Score (QS) of your ad.  Now Google has added what they call “the expected impact from your ad extensions and format” as a third factor determining your final Ad Rank.  In other words:

Before: Ad Rank = Max CPC x QS

After: Ad Rank = Max CPC x QS + “Expected Impact from Your Ad Extensions and Formats”

“How does that affect me?” you may ask.  Well, it is too soon to tell, but at first sight, most of the AdWords experts seem to agree this change will not be so good for small and medium-sized businesses with fewer resources to implement updates to their campaigns.

Google Ad Extension Sample

Google Ad Extension Sample

A lot of small businesses handle their campaigns internally and can’t afford the luxury of paying third party Agency fees to handle their campaigns for them.  As long as their campaigns were kept simple, they were still able to get decent results or ROI.  After all, Google’s message to its advertisers has always been something like “create relevant and original content for your targeted keywords and you can reach qualified searches for a reasonable cost (read: low CPC).”  So basically, even if the QS number was a bit of a grey area, most advertisers understood that original and relevant content will always score better than that of competitors who didn’t care much about their actual content.

What happens now?  With this announcement and the change in the algorithm, Google is no longer just telling you to “create relevant and original content” and instead, it’s also hinting that in addition to that, you will also need to “use more of Google’s ad features.” Again, look at the “After” Ad Rank formula above and you will see that Google is now expecting advertisers to include Ad Extensions and Ad Formats so that they can also calculate the impact of your ads and determine your rank.  In effect, Google has just added one more level of difficulty to the AdWords campaign development process, making it more challenging for small businesses to understand what they need to be doing (differently) now in order to get the same results that they were getting before.

If you’re a frequent AdWords user, I’m sure you’ve seen the pop-ups from Google over the past few days telling you that now you can also incorporate Ad Extensions for individual Ad Groups rather than just at the Campaign level.  The problem is that the majority of small business advertisers are not even using Google’s Ad Extensions at any level, and many more don’t even know how to set them up.  If you are like most of the small business advertisers polled by WordStream*, I’m sure you will see yourself in one or several of these categories.

  • 19 out of 20 Small Business advertisers do not currently have call extensions set up on all mobile campaigns
  • 20% of Small Businesses send all clicks to their homepage
  • 25% of Small Businesses send all traffic to just one landing page

Unfortunately, even if you decide to add the newly required Ad Extensions to your campaign, that may not be enough.  It is very likely that you will also need to make changes and additions to your own website to make sure that the content of each page is unique and relevant to each of your extensions.  You will need to make sure that you have enough variety of landing pages (pages that your ads and ad extensions will now link to) so that Google considers your ads relevant and it awards it a higher Ad Rank.  But that’s not all.  Your actual Ad Extensions will also need to perform well (or add “Impact” to your ads) rather than just “be added” if you want Google to rank your ads higher.  If you’re a small business owner reading this article, I can already feel your pain thinking that your marketing life has suddenly become more complicated.

The good part is that your campaign budget will not need to increase with the addition of Ad Extensions.  If you need any help, our SEO Team at MGR is here to help and guide you in the right direction.  Whether we host your website or not, if you just need some quick help to make sure your campaign complies with the latest algorithm update, simply contact us and we will show you how to update your ads and your website to improve your campaign results with minimal changes.  Google’s Ad Extensions are actually FREE, however, NOT adding them, will cost you money and valuable results since your Quality Score will suffer.

Yes, AdWords just gets more complicated with each update and you may feel like each added feature is targeted towards large companies with huge advertising budgets but it doesn’t have to be that way.  You can actually outperform larger companies with swift moves and quicker reaction time.  MGR is always committed to helping all of our PPC clients achieve the highest results possible within their budget, and that’s our dedication to you.

As always, I’d like to hear your thougths as well.  You can reach me directly at the office of via email.  I always reply personally to all of my emails.  Or you can also leave your question or comment below and I will reply to you as soon as I can.

Until next time, this is Manuel Gil del Real (MGR)

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