AdWords Algorithm Updated

Google has quietly announced a fundamental change to the way it ranks ads and calculates advertisers’ costs. Ad Rank is the method by which Google decides where each ad will show in the SERPs when a number of advertisers are eligible to show for any given search – the higher your Ad Rank, the higher your ad.

Google has quietly announced a fundamental change to the way it ranks ads and calculates advertisers’ costs.

Ad Rank is the method by which Google decides where each ad will show in the SERPs when a number of advertisers are eligible to show for any given search – the higher your Ad Rank, the higher your ad.

This has always been calculated by multiplying an advertiser’s maximum bid for a keyword by their Quality Score for that same keyword, which itself is determined by a number of factors such as historical CTR, landing page relevance etc.

Now Google has announced that a third component is to be factored into this calculation – the expected impact from ad extensions and formats.

The official announcement states that factors such as the relevance, CTR and prominence of extensions will be used to estimate the impact of ad extensions and formats.

So what does this mean?

Well, the adoption of ad extensions is now vital to driving the best possible performance from your account at the lowest possible cost, but a well-run account should already be utilising ad extensions in some form anyway.

On the PPC team at Equator we set up sitelinks extensions at the launch of every new campaign, with other extensions added where relevant.

We’re also in the process of experimenting with many of the new ad extensions recently launched by Google, such as image extensions.

We’ll soon find out what impact this change to Ad Rank has on costs.