AdWords Ad Rank Formula Changes and the Impact on PPC & SEO

Last month, AdWords quietly announced that there would be a change to how they calculate Ad Rank. Up until now, it has been a relatively simple formula:

 {Max CPC X Quality Score} or £0.50 X 8 = 4

Going forward, they will now factor in the ‘expected’ impact from your Ad Extensions. So, what does this mean for the above calculation? Well, it could be too early to predict, but we are not too sure is there will be an exact calculation anymore.


What impact will this change have on PPC?

The explanation provided by AdWords is as follows:

“Ad extensions and formats can now influence the position of your ad on the search results page. If two competing ads have the same bid and quality, then the ad with the more positive expected impact from extensions will generally appear in a higher position than the other.”

So, if you haven’t already done so, now is the time to make sure that you are fully utilising all of the Ad Extensions available to you. For advertisers that have been slow to adopt Ad Extensions, they will most likely see their average positions slightly dip over the coming months. To offset this, it may be better to increase their CPCs to counteract this drop off.


What impact will change have on SEO?

Many advertisers have yet to utilise Ad Extensions, and this has led to many industry experts suggesting that this change in Ad Rank is simply a way to force them to take notice and update their accounts.

In doing so, this ensures that the majority of advertisers will use Ad Extensions – with the expected impact on SERPS most likely being Paid Advertising taking up a larger ‘above the fold’ screen share than it currently enjoys.

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