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AdWords Update Reduces Ad Space

AdWords Update Affects Cost to Dealer Campaigns

We learned this week, through Search Engine Roundtable, that Google will no longer show ads to the right of its search results. Based on the article cited above, there will be four ads at the top, with two exceptions. Google will show PLAs (Product Listing Ads) and ads in the knowledge graph on the right hand side. So far our tests still show ads on the right hand side, so we expect this to be a gradual change.

There are a number of reasons Google could have made the change, but instead of speculating on their intentions, we are more curious what this means for the automotive industry and more specifically how it will affect dealer’s paid search campaigns.

Cost per Click is going to Increase

If I was going to make a guess as to why Google made the change, I would probably say this has a lot to do with it. Since Google is reducing the amount of real estate, our theory is the cost for each position is going up. It’s hard to say how much CPC will increase, but we expect it to happen gradually over time.

More Focus on Cost per Conversion

This change is a reminder that it’s Google’s world and we just live in it. If the CPC increases, as we believe it will, the amount of traffic your current budget will generate is going to reduce. While one logical strategy would be to double the current marketing budget, that is unlikely to happen. As an industry we will need embrace the new normal and learn to focus more on conversion metrics. By placing more emphasis on what it costs to generate a lead through paid search, we can worry less about the cost of each click.

Paid Search Swim Lanes May Become Necessary

Swim Lanes

Manufacturers may need to rethink how aggressive they are in local markets. All three tiers of automotive advertising have jumped into the paid search pool and we are all racing for the first position. We have never been huge proponents of “swim lanes”. The theory behind them is good natured, but not very good in practice. Understanding user intent is key, and unfortunately there is too much variance in the intent of a “Make Model Geo” search. That said, this tactic may be necessary to deal with the cost increase.

Long-Tail Search Campaigns are More Important

Almost as a sub-point to necessary swim lanes, agencies and dealers are going to have to get A LOT better at creating and optimizing effective long-tail campaigns. There won’t be nearly as much competition for these terms so cost will decrease and viability will increase. Furthermore, everyone is going to have to be more creative about the types of searches we are targeting, think parts & service. The challenge will be managing the number of campaigns against the budget.

Paid Search for Conquest Just Got Challenging

If you thought using paid search for conquest was difficult before, try it with one third of the ad space. This may turn out to be so cost prohibitive that it is not just a viable tactic anymore. Or, it may just be a challenge to find more creative avenues to generate conquest traffic.

More Emphasis on Organic Rankings

Two things are going to happen that will increase emphasis on organic traffic. One is cost, which we have aptly covered here, the second is less distraction. With only four ads taking attention away from the user, we believe the CTR on organic listings could increase. Don’t post the obituary yet, it appears that SEO is not dead after all.

Bing Could Win Big

Depending on how Bing reacts to Google’s changes, they could end up being the big winner here. We are already an advocate of the Bing Ad Network due to the lower costs and higher conversion rates, but Google may be forcing us to spend even more money on Bing.

Impression Share as a KPI Could Change

We use impression share as a way to measure the effectiveness of our campaigns. Because real estate is going to be reduced so drastically, we may need to re-evaluate what we consider to be an effective impression share.

Google Search Partners

As of late, we are using less and less of the Google Search Partners Network. The metrics don’t justify their inclusion. With this reduction in ad space, however, we will have to test changes to ad engagement and costs to see if they are now a more viable option.

This situation is still unfolding, so we may see some of these “predictions” come true and some fall completely flat. Either way, every change, every problem creates a new opportunity, it will be up to all of us to find those opportunities and capitalize.

Let us know your thoughts, we are definitely interested in other opinions on this massive update.


by Robert Bokori

Robert Bokori

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