Recently, Google announced an update to their Ad Ranking system  that will affect how the search engine determined which ad extensions and formats are relevant to searchers. Currently, Google uses Ad Rank—a calculation based on your max CPC bid and quality score—as their system for serving ads on the search engine results page. Now, the calculation for determining Ad Rank will include a third factor: the expected impact of your ad extensions and formats. In turn, ad extensions and formats can influence the position of your ad on the search engine results page (SERP). Google also reports that Ad Rank is more heavily weighted in determining whether your ad is eligible to be shown with ad extensions and formats now.
Some of the most important implications of this change reported by Google include:
- Ad extensions and formats can now influence ad position in the SERP
- The elements that are considered when determining the potential impact of extensions and ad formats include relevance, clickthrough rates, and the prominence of extensions and results on the SERP.
- Advertisers may need to increase Quality Score, bid, or both for ad extensions and formats to appear now that Ad Rank has an increased influence on ad visibility.
- Advertisers’ CPCs may fluctuate due to changes in ad positioning and increased or decreased relevance.
In general, ad extensions are only shown for the top three positions on the SERP. With limited real estate, marketers will have to strive to achieve one of the top three positions to display their ads as frequently as possible to potential customers. As a reminder, Product Listing Ads do not serve as ad extensions or formats that can help Ad Rank. The list of ad extensions that will influence Ad Rank include: offer extensions, ad sitelinks, location extensions, and call extensions.
According to Ryan Jamison, Director of Paid Search Editorial, this change means that ad extensions are no longer merely an enhanced ad format to improve clickthrough rate. ”Now, ad extensions are necessary for optimal performance on Google. Extensions are as important as relevant ad copy and landing pages. A tight and optimized ad group structure will be more important than ever to ensure relevant ads, landing pages, and extensions work together to dominate performance for top keywords.”
Ryan also states the Ad Rank update demonstrates the importance of mobile search, not only to Google and the industry as a whole. “Extensions help mobile users find what they are looking for much quicker and drive them to the best content fast.”
Ranil Wiratunga, Senior Director of Paid Media, adds “advertisers and agencies now need to invest more heavily in optimization for Sitelinks, Call Extensions, Local Extensions, and Social Annotations.”
The change to Ad Rank went into effect on Tuesday, October 22 and is now live across all auctions.