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AdWords Price Extensions Might Not Be as Awesome as You Think

Price extensions, released out of beta testing in mid-2016, feature products or services along with pricing information below traditional text ad copy, significantly expanding the size of text ad units. Along with the additional real estate, these extensions also provide users with more information about product/service pricing, which might help lead to more informed clicks and thus higher conversion rates.

While several price extension case studies published show that ads with price extensions have higher click-through-rate than those that don’t, it’s important to account for variables such as keyword mix, device, and the fact that price extensions tend to show in higher average positions than ads that don’t trigger these extensions. Here we assess the performance impact for one advertiser currently using price extensions, and also highlight that Google appears to be showing these extensions in unexpected places on the SERP.

Price Extensions tied to Higher CTR and CPC

With such a substantial addition to the area taken up by a text ad, price extensions should naturally draw more clicks than ads that don’t feature this additional real estate. Indeed, looking at relative performance for the median exact match keyword when price extensions are featured versus when they are not featured, CTR is higher across all three device types when price extensions are triggered.

Relative CTR is highest on phones, which also produce the vast majority of price extension impressions. For the keywords studied, phones accounted for 69% of all impressions when price extensions were triggered, compared to just 34% when price extensions were not triggered. This might speak to how likely Google is to feature these extensions on different device types. It also highlights the need to segment by device when comparing performance since device traffic share isn’t the same for ads that feature price extensions as for those that do not.

As you can also see in the above chart, average cost-per-click is also higher for the median keyword in situations when price extensions show versus when they don’t. Are the extensions forcing advertisers to pay more? Probably not, and the difference likely has to do with Google’s propensity to show price extensions for ads in higher positions on the page.

Price Extensions Triggered When Ads Appear Higher on the Page

Looking at the same set of exact match keywords, we find that ads that feature price extensions have a higher average position than when the same ads are featured without price extensions. In average position, a lower value means an ad is featured higher on the page – hence the flipped axis in this chart.

As you can see, while average position was just 0.1 positions higher on the page for desktop computers, that figure is 0.4 for both phones and tablets. Higher position likely explains why CPC is higher, given that clicks in higher positions typically cost more than those in lower positions as they require more competitive bids.

While a 0.4 position difference might not seem like a lot, it can have a significant impact on the likelihood of searchers clicking on an ad. Particularly on phones, where the top ad listing might take up the entire screen above the fold, moving up a single position can have massive effects on CTR.

As such, it’s fair to attribute at least some of the increase in CTR observed for ads that feature price extensions to the simple fact that these ads are typically in higher positions than those that do not feature price extensions for the same keywords.

But what about the value of these extensions in driving more orders for advertisers? Users are getting more information about potential pricing, which should lead to more informed clicks and potentially higher conversion rate. However, the data shows no such effect.

Conversion Rate Lower When Price Extensions Show

Across all three device types, the median exact match keyword has a lower conversion rate when price extensions are featured compared to when they are not.

Thus, it appears that there’s not a clear positive impact of giving users this additional information on their likelihood to convert. While this is only performance for one advertiser, it is a bit concerning given that, again, CPC is higher when these extensions show as they’re typically triggered for higher position ads.

This is not to say that price extensions can’t drive great value for brands, and advertisers have to take into account the impact of these extensions on total click and order volume. Even with a lower conversion rate, overall sales and the bottom line might benefit from price extensions.

What We Know About When Price Extensions Show

We also discovered some other interesting insights looking at ad position and page location data for price extensions.

As mentioned, price extensions are more likely to show for a keyword when it is in a higher position on the page, but they are not restricted to only showing for ads in the top position. Average position of ads featuring price extensions is as low as 3.0 for one of the keywords studied.

In fact, we’ve found that these extensions can even populate for ads featured at the bottom of the page.

While these occurrences are relatively rare for desktop and phones, 9% of all tablet price extension impressions happened at the bottom of the page. For this reason all earlier performance comparisons are based on top of page impressions only, since bottom of page performance is significantly different than top of page for all text ads.

Conclusion – Price Extension Impact Murky

Ads featuring price extensions clearly have higher CTR than ads that do not feature these extensions, even when segmenting performance by exact match keyword for each device type. However, much of that CTR difference can be attributed to higher average position.

While these extensions could theoretically provide users with more information that might help conversion rate, that does not appear to be the case across the board, and the advertiser studied finds that conversion rate is actually lower when these extensions show.

Advertisers should certainly test these extensions out to see how they perform, but it’s important to carefully dissect results with proper segmentation and nuance in order to understand how price extensions are really impacting performance. Despite the obviously higher CTR, the underlying performance might be more underwhelming than most brands expect. Still, these extensions might help drive increased click and order volume with their size and appeal.

 

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