Posted: Monday 22nd February 2016 in News, Owned and earned media, Paid Media, Retail Strategy, Thought Leadership.

Update 22/02/16 13:00: We have monitored our clients’ activity over the weekend and so far have not seen any adverse effect on performance. We expect that the impact will become more apparent as awareness about the change grows among both advertisers and customers.

 

Google cuts three ads from search results page

On the 19th February Google rolled out significant changes to the desktop search landscape. The most significant of the changes is the removal of adverts from the right hand side of the Google search results page, leaving listings at the top and bottom of the page only. As a result, the search result page will have a maximum of seven results on the page (four at the top and three at the bottom) instead of the usual ten.

This change impacts on natural search as well, as the four ads at the top of the page mean extra scrolling in order for a user to see the first natural search result. Additionally, there has been a small change to site links, with the deprecation of the expanded version and the reintroduction of two-line site links. Product Listing Ads (PLAs) remain above the traditional PPC ads, or to the right of the listings. PLAs are now much more prominent when they appear to the right of the traditional PPC ads, due to the lack of other ads in this area of the page.

Although global testing with this new format is being carried out on mobile, the experience currently remains unchanged. The alteration of the desktop search results brings the experience more aligned to the tablet and mobile format, with the right hand ads having been removed from the tablet results page in Q4 2014.

How did this come about?

The change comes after a period of global testing with a sample set of users. The intention of this test was to improve the relevancy of the search experience to the user, and the key finding was that engagement levels and auction costs were not impacted negatively by the change. This has driven the decision to rollout globally, rather than by market, which is often the strategy for such changes. It was largely unexpected in the market, and little to no notice was given before the change began to roll out.

What does this mean for advertisers and retailers?

We are expecting to see:

  • Increased volatility in the search landscape, especially over the next two weeks – advertisers who have not noticed the change are in danger of getting left behind
  • Rising auction costs, as advertisers compete for fewer ad slots and look to protect against immediate sales and revenue loss
  • Larger advertisers will dominate, using any reserve in budget to counteract the above
  • Improved click through rate for the top PPC ad positions, especially for position four, which would historically be further down the page
  • A reduction in traffic from natural search, as listings are now more likely to be below the fold
  • A reduction in click through rate for PPC ads in positions five to seven, due to the location at the bottom of the results

Due to the above, there are two short term risks that we are mitigating for with our clients:

  1. A potential to underspend against targets, due to ads falling off the first page of the Google search results page
  2. ROI targets may not be achievable, due to increasing bid prices

The use of customer behaviour data such as time of day and day of week to inform marketing activity, and adopting a ‘customer first’ approach through customer match and remarketing lists for search ads (RLSA) will be more important than ever. We expect advertisers to increase focus on PLAs, due to the fact that this format remains unchanged and Google continues to work on increasing the coverage across all devices.

How should advertisers respond?

The winners here will be those that react quickly to the change, tracking and actively managing campaigns. Early testing will enable advertisers to gain a competitive advantage and deliver learnings that will stand them in good stead for the coming weeks. In the short term, we recommend that advertisers:

  • Develop a controlled plan – this is especially important over the next two weeks as some listings will start to move beyond the first page of Google. It is key to understand the search terms important to your business, monitor throughout the day for any significant fluctuations and develop a plan for safeguarding these within the constraints of your budgets and KPIs.
  • Be flexible with budgets and KPIs – changing the goal posts of your campaigns may be required. If maintaining revenue is your primary objective, additional budget needs to be secured at a lower ROI. Also be prepared to flex your budgets and efforts across different search activity and marketing channels.
  • Manage your technology – ensure your preferred budget and bid management provider is able to react quickly, and have a change plan in place. Everyone will need to evolve in some way, shape or form.
  • Carry out controlled testing – this will be key in order to understand the long term impact; not just on PPC, but also the halo effect of the whole customer journey across PPC, PLA and SEO.

In the long term, making specific recommendations with confidence will only be possible once we understand the impact on consumer behaviour and metrics including click through rates and auction costs.  We expect that the key recommendations will include:

  • Evolving your 2016 PPC plan – expect your paid media partner to proactively present how your approach needs to evolve and how this fits into your wider digital plan.
  • Changing your natural search approach – this will include understanding which terms are more likely to serve the increased ad formats at the top of the page, and evolving your keyword strategy based on this.
  • Reforecasting your digital activity – this will be essential due to the likely effect on PPC and the knock-on impact on PLA and natural search performance.

“This is the biggest change rolled out by Google since the move to paid-for Product Listing Ads in 2013, and is likely to be the most significant change to the Google results page this year. The impact on less paid ads on the first page is likely to push up the auction price over time. Advertisers need to be prepared to release extra budget at a lower return on investment in the short term to mitigate losses in revenue.” Ben Latham, Director of Digital Strategy, Summit.

Stay tuned for updates as we witness the impact of this change on our clients and across the wider market. If you have any questions or would like to discuss the change in more detail please contact Dave Trolle on 01482 876876.


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