There is nothing like a downturn to force a company focus on the bottom line, even a company like Google whose bottom line is still growing at a healthy pace. Continuing its recent efforts to juice advertising revenues wherever it can, Google is changing the way ads are placed on its search results pages.
One of the two biggest determinants of where an ad ranks compared to other ads on the same results page is an ad’s “quality score” (the other is the amount an advertiser bids for a particular keyword). Google is making two tweaks to how the quality score is calculated that could have a major impact on which ads appear at the top of the page.
Lots of factors go into Google’s algorithm that determines the quality score for any given ad, but how many people actually click on the ad is one of the major ones. Ads that appear first, though, get a boost in click-through rates simply by being listed above all the other ads. Google is now taking into account the boost in click-through rates an ad gets by dint of its position, and backing that out from the quality score. That should result in a boost to overall quality scores.
The second change will be more visible. We’ll be seeing a lot more ads above search results in addition to the side because Google also just made it easier for ads to occupy those slots. In the past, only ads with that were both ranked the highest and met a minimum quality score would be placed above the regular search results. Here’s how Google explains this change in its AdWords blog:
To appear above the search results, ads must meet a certain quality threshold. In the past, if the ad with the highest Ad Rank did not meet the quality threshold, we may not have shown any ads above the search results. With this update, we’ll allow an ad that meets the quality threshold to appear above the search results even if it has to jump over other ads to do so. For instance, suppose the ad in position 1 on the right side of the page doesn’t have a high enough Quality Score to appear above the search results, but the ad in position 2 does. It’s now possible for the number 2 ad to jump over the number 1 ad and appear above the search results. This change ensures that quality plays an even more important role in determining the ads that show in those prominent positions.
The change also ensures that there is a larger pool of ads that can be placed up top. Those ads occupy the most valuable real estate on the page. Putting more ads there should result in more clicks, and thus more revenues for Google. And remember, because of change No. 1, there should be more ads with high enough quality scores to make it to that coveted spot.
In the past, Google has been conservative about which ads it would place above search results because it does not want to dilute the overall search experience. By redefining what makes a quality ad, it can put more ads up there and still feel good about itself.