Why Google AdWords is More Competitive Now with Ad Extensions

As any online marketer knows, Google’s been pretty busy the last couple of years making some major algorithm changes to search with Penguin, Panda, and Hummingbird, but did you know that the search giant also made some changes to PPC as well?

Here’s how it was before: Google used two key metrics to measure how they would rank a paid search ad – the maximum cost per click (CPC) and the Quality Score of the ad. Now there are three factors that it considers: CPC, quality score, and ad extensions.

What is a Quality Score and Cost Per Click?

Quality score determines how relevant your ads, keywords, and landing pages are to the person who sees the ad. It’s basically a ranking of how useful that ad is to the user. If the user is searching for kitchen appliances, and your ad is about pool construction, you would have a lower Quality Score for that search.  Factors that determine Quality Score:

• Expected click-through-rate (CTR)
• Your Display URL’s past CTR history (has this link received clicks in the past)?
• Account history
• Landing page quality
• Keyword and ad relevance
• Geographical success of your previous ads
• Targeted devices

Cost-Per-Click (CPC) means that you pay only if that user clicks on your ad. For CPC ad campaigns, you indicate the max amount ($) you want to bid and anytime a user clicks on an ad, you pay (but not more than the amount you bid).

Google assigns every keyword you choose to target with a quality score from 1-10. The higher your Quality Score, the easier (and less expensive) it is for the keyword to enter the auction and leads to a lower cost-per-click (CPC). Basically, the higher your Quality Score, the less you’re going to pay for each click. Each score is updated regularly by Google, you can learn more about quality score by clicking on the video below:

What Are Ad Extensions?

The newest addition to the Google AdRank algorithm are Ad Extensions. These extensions are additional bits of information about your company that can take on many forms like this:

The extensions give users options like the ability to call the company directly by pressing a button or downloading an app (if they’re on mobile). Or, if you’re looking to collect more traffic to your website and increase sales, you’ll see that ad extensions can show location, reviews, ratings, and sitelinks. To be able to show ratings and reviews, businesses put in the extra work to claim and fill out their Google Places listing.

According to Google, “Extensions can help improve the click-through-rate (CTR) of your ads,” which means, “more customer traffic.” According to The Search Agency, a recent study found that, after the new AdRank formula, that there was a significant jump in CTR rate for ads with ad extensions, concluding that ads with extensions might be served more often.

Businesses will have to understand, Google don’t always show ad extensions. They choose to show your extensions based on your bid amount and quality of your keywords. To get extensions to show, businesses must continually and consistently check quality score, making sure keywords have good value and landing pages have relevant ad content.

Google also looks at these factors to determine whether or not to show your ad extensions:

• The position of the ad on the search engine results page (SERP)
• Your overall AdRank
• Other ad extensions that have already been created and enabled in your campaign

By making sure you choose the right keywords to target and create relevant campaigns and landing pages to pair with them, you’ll be able to increase your AdRank and keep it that way. It’s important to remember that PPC requires consistent monitoring and management to make your ad campaigns cost-effective for your business.

The AdRank adjustment started back in October 2013, so if  you’ve seen a drop in CTR, it might be because of ad extensions. If you aren’t using extensions yet, it’s about time you did. They’re absolutely free!