Last week, we covered Google’s recent switch from “Sponsored Links” to “Ads” as the disclosure label above the pay-per-click advertisements, as shown here:
Google confirmed having rolled out this change on English language domains November 4.
And a recent study form Harvard Business School Professor Benjamin Edelman suggests that such a change could have a dramatic impact on search marketing performance. Edelman conducted an online experiment in which he measured a random collection of users’ interactions with search engines, both in the standard configuration, as well as in an altered version in which he changes the advertisement disclosure label. For half the subjects in the study, Edelman’s team replaced the “Sponsored Links” label with “Paid Advertisements and the other half were served the standard results page. Across all subjects in the study, Edelman found that users exposed to the “paid advertisement” label clicked on 25 to 33% fewer advertisements than the control group which saw “Sponsored Links.”
A 25 to 33% reduction in CTR would be significant for most advertisers. Now that the “Ads” disclosure label has been rolled out in the U.S. for more than a week, our research team set out to measure the actual impact of this change on advertising performance.
Our analysts looked at AdWords data for all clients of The Search Agency running campaigns in the United States from October 28 – November 10. We excluded any campaigns that significantly increased or decreased their budget during this time, as well as any campaigns in which our Account Managers had implemented a keyword expansion or culling.
This data set includes over 80 million impressions and 1.5 million clicks and for both business-to-consumer and business-to-business advertisers across a wide range of industry verticals.
To determine the impact of Google’s change on our clients’ performance, our analysts conducted a pre/post analysis — comparing six key metrics for the last 7 days of “Sponsored Links” to the first 7 days of “Ads”.
Across all AdWords campaigns in our sample, we found the following changes in account performance:
- Average position increased 1.5%
- Total impressions decreased 1.5%
- Total clicks increased 9.7%
- Average Click-Through Rate (CTR) increased 11.4%
- Average cost per click (CPC) dropped 2.3%
- Total cost increased 7.1%
Contrary to what we may have expected, CTR has increased 11.4% since Google went to the “Ads” disclosure label, with no significant shift in average position or CPC.
After reviewing Edelman’s research, no one here predicted that CTR would increase by double digits. Rather, our team expected the change to have little to no effect. Our hypothesis was that the average search user has become so familiar with the general layout of the Google results page, that a change in wording on a small label would likely go unnoticed.
As Edelman points out in his study, the disclosure labels are, in fact, the smallest text on the page. And while one could argue that the term “Ads” is more clear and explicit than “Sponsored Links,” Google has in fact deleted 11 characters; thereby making the already minuscule label that much more inconspicuous.
Conspiracy theorists have plenty of fodder with this most recent innovation. Did Google make the change in response to increasing pressure from the Federal Trade Commission? In testing this change, did Google see a similar jump in CTR and accelerate its implementation?
Bottom Line: Google’s switch from “Sponsored Links” to “Ads” has not had a negative impact on advertiser performance. In fact, it may have had just the opposite effect – searchers have clicked on a higher percentage of ads since Google made the switch.
With all the recent changes Google has made to the results page, however, who knows if there’s any real correlation between this latest modification and an 11.4% increase in CTR? Either way, we’ll be watching this trend very closely over the coming weeks. In the meantime, what type of results are you seeing in your accounts? Leave a comment and let us know.