Google Changes “Sponsored Links” to “Ads” – Watch your Click-Through Rates

Posted on Thursday, November 11th, 2010 by Print This Post Print This Post

Categories - Featured, News, SEM

In conducting research for my blog post on Instant Previews, I noticed yet another change to the ubiquitous Google search results page.  And based on the results of a new study from a Harvard Business School professor, this change could pose a far more serious threat to your click-through rate (CTR) than Instant Previews covering up ads.

Without much fanfare, Google has replaced the label “Sponsored Links” with the word “Ads” above both the top 3 paid results as well as the right-hand rail:

Google made this change on November 4 and confirmed the roll-out to Barry Schwartz at Search Engine Land.  Google has officially retired the term “Sponsored Links” on all English language domains, and will be rolling it out to other domains and languages in the near future.  At the time of this writing, “Sponsored Links” is still being used on Gmail, Google Maps, and Google Shopping.

With all the tweaks Google has made recently to its standard results page, what impact could a change from “Sponsored Links” to “Ads” really have?  Long before Google made the switch, Ben Edelman and his research team set out to answer this question.

Edelman conducted an online experiment in which he asked a random group of internet users to answer two questions based on research using a search engine.  The subjects were directed to use a custom URL provided by the research team.   For half the subjects in the study, each reference to “Sponsored Links” in the Google results page was replaced by “Paid Advertisements” as shown here:

Edelman’s study included questions pertaining to “commercial research” (searching for a mattress retailer) as well as more “informational research” (researching various cancer treatments).  Across the entire sample and all types of searches, Edelman estimates that a change from “Sponsored Links” to “Paid Advertisements” yielded a 25 to 33% reduction in clicks on advertisements.

The study has a sound methodology and the entire article is definitely worth a read.  It includes a detailed overview of the prior research into this topic as well as the role of the Federal Trade Commission (FTC) in regulating pay-per-click advertising.

Edelman maintains that Google has not gone far enough with this recent change.  The FTC has called for advertising disclosures to be both “clear” and “conspicuous.”   I certainly consider the term “Ads” to be more clear than “Sponsored Links,” but Edelman provides a convincing argument for why the term “Ads” will not be nearly as effective as “Paid Advertisements” in distinguishing the sponsored from organic results.

What do you think of Google’s latest change?  Have they gone far enough with this disclosure?  Had you even noticed Google’s new advertising label?   And what impact (if any) do you believe it will have on search behavior?  Leave a comment and let us know.

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13 Responses to “Google Changes “Sponsored Links” to “Ads” – Watch your Click-Through Rates”

  1. “a change from “Sponsored Links” to “Paid Advertisements” yielded a 25 to 33% reduction in clicks on advertisements”

    This can be very devastating for smaller players.

    • Alec Green says:

      Thanks Dennis. A 25% decrease in CTR would be devastating for pretty much everyone. I don’t anticpate the impact of Google’s latest change to be anywhere close to this, but we’ll be watching it very closely.

  2. Keith Wilson says:

    One could argue that search behavior is so ingrained in the user that they will filter out such a change since they largely focus on the content/results.

    The change would most likely impact top 3 paid search results contained within the premium placement area. Test, test, test.

  3. Enough already, Google. Stop making changes. Yes, this is going to be a major disappointment for businesses.

  4. David says:

    I agree with Elizabeth. Google won the search war initially because of their quality and simplicity. Now they are making so many changes it is introducing complexity that might impact them negatively in the long run

  5. Graham says:

    David,

    I’m not sure the average user of Google, all x billion of them a month, notices or comprehends the changes.

    The negative fallout, in my opinion, will be derived from those of us who work in the online marketing industry and have been both challenged and concerned by the latest algorithm shift, growth of Google Places and location based results, and if you manage PPC the minor changes that may influence CTR and ultimately QS.

    Interesting post.
    Graham

  6. Endo says:

    I don’t trust sponsored links anymore on any search engine. It is unfortunate, but a certain amount of ‘sponsored links’ lead to bad sites that infect computers with malware.

    The negative impact to companies come from more from this than they do from the changes at google in my opinion.

  7. Bob Mushroom says:

    I never click those ADS anyway. We all know they are ads. I don’t even look at them let alone the word above them. You can call ‘em whatever you want, but people should recognize them as ads anyway.

    I guess this only affects stupid people which most of the world is composed of.

  8. Dark knight says:

    Awesome! I’ll be sure to look for it!(:

  9. Catina Tacopino says:

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