At the end of February 2016 Google announced they were removing side ads from search pages. Many in the industry began speculating how this decision was going to impact cost-per-click (CPC) and competition. Overall, Google went from displaying a maximum of 11 ads per page to displaying a maximum of 7 ads. Previously, Google displayed 3 ads at the top of the page, with the remaining 11 ads on the side. Now they’re displaying 4 ads at the top of the page and 3 at the bottom of the page, after the organic (non-paid) results.
The concern was that the reduction in ads would mean increased cost and competition for the remaining “advertising” spots.
“It’s going to potentially start costing a lot more to get your text ad to show, so smaller companies are going to be squeezed out a lot more to compete with companies with bigger ad budgets,” said Tien Nguyen, the Director of Technology at CPC Strategy, on the company’s blog.
Impact on Cost-Per-Click
We’d like to update you with and some examples of how Google’s decision has impacted our clients. We compared two AdWords campaigns from January 1-31 and March 1-31. We picked these two campaigns because they had almost no changes in terms of keywords, bidding strategy etc.
The first campaign’s Cost-Per-Click (CPC) decreased from $0.72 to $0.70. It’s average position dropped from 3.1 to 3.3. The second campaign’s CPC decreased from $0.21 to $0.20. It’s average position dropped from 2.6 to 2.8.
While both campaigns had a minor drop in average position, both also saw a minor drop in cost. Overall, it would be hard to argue that these campaigns saw a substantial increase in CPC or a drop in rankings.
Long Term Implications
First things first. AdWords will still help you get new customers (even if your budget is only a few hundred dollars a month). Bigger companies may have bigger budgets, but this doesn’t mean they’re willing to pay more per lead.
Secondly, Ottawa is a fairly small market and while some industries and keywords are extremely competitive, many companies in Ottawa haven’t implemented solid Google Adwords campaigns, meaning cheaper clicks and great positioning for comparatively little budget.
And finally, if you’re already advertising on AdWords you shouldn’t expect a big increase in cost or drop in rankings like some experts were speculating might happen.