AdWords Brand Ads Shifting to Bottom of SERP Leading to Lower Sales

About two years ago, Google announced that they would begin serving paid search ads at the bottom of search engine results pages (SERP). The reasoning behind this change was supposedly to improve the user experience with a new layout that “[fit] better into the user’s flow as they scan the page.” Purportedly, ads served at the bottom of the page had a higher average click-through rate than side rail ads in tests conducted by Google.  Sounds like everybody wins, right? Not necessarily.  What if your ad is the only ad on the page and it still shows in the bottom position? Even worse, what if it’s your brand ad?  Fast forward to today and that’s exactly what’s happening to some of our clients. Part of Google’s rationale for serving brand ads at the bottom of the SERP is the lack of competition on certain brand terms. When searching for these brand terms, Google predicted that customers would either click on the organic link or scroll through the entire SERP and click on the brand ad served at the bottom of the page. If this hypothesis proved correct, the benefits of shifting brand ads to the bottom of the SERP were obvious; for clients with a strong organic presence, it would cut ad spend by increasing the likelihood of receiving a free click. Additionally, potential customers would get a less cluttered SERP, presumably yielding a better user experience. While initially plausible, the problem with this theory is that, in some cases, our clients aren’t seeing the detoured traffic come through on their organic listings. Instead, we’re seeing a decline in all-site sales growth. For one client we studied, the absence of paid search ads above the fold did not result in website revenues shifting to an alternate channel. In fact, total website revenue dropped dramatically, despite the fact that the client owned the number one organic listing, as well as a Knowledge Graph image on the right-hand rail. In the six months prior to the change in brand ad position, overall website sales for the client had exhibited 53% year-over-year growth. After the layout change, website sales growth has slowed to a more muted 31%. This change is statistically significant even at an alpha of 0.5%.

This client’s experience supports the conclusions of several research studies over the last decade -- namely, that organic and paid presences can reinforce each other, causing click-through rates to be highest when both are visible. Studies have also shown that the co-visibility of organic and paid on branded search queries causes a 7% increase in purchase intent, and a 13% lift in brand recall. (Brand Lift of Search, Enquiro & Google, April 2008) RKG's own research suggests that the degree to which brand paid search is incremental varies on a case by case basis, but for some sites, cannibalism is quite low.  Meaning, we should not expect the organic listing to capture all brand traffic in the absence, or in this case, with the lower prominence of the paid search listing. So what do you do when the only competition you have on your brand terms is from Google itself?  Unfortunately, it seems that advertisers are left with only two unpalatable choices:
  1. Increase bids to surpass Google’s top of the page bid threshold, putting brand CPCs completely at the mercy of Google, but still meeting the overall sales goals, or;
  2. Refuse to increase bids, hoping Google realizes that its misguided effort to decrease SERP clutter is actually decreasing the revenue of their advertisers, and ultimately themselves.
One last question for the more speculative readers: where is all your lost traffic going? And for the more pragmatic: how do you get it back?
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