ADI: Big Spenders Cash In On Google’s Removal Of SEM Inventory

Google’s decision to remove right-hand side (RHS) search ad placements had advertisers worrying about how it would impact their costs, but it looks like the search giant’s biggest advertisers are actually reaping the benefits.

Google’s decision to remove right-hand side (RHS) search ad placements had advertisers worrying about how it would impact their costs, but it looks like the search giant’s biggest advertisers are actually reaping the benefits.

When the change was first made in February, Google reduced the number of paid search placements by 30%.

Given that real estate on mobile was already limited, the February change only has an impact on desktop ads, which accounted for 58% of total impressions in Q1 2016. Despite reducing paid ad placements by 30%, impressions decreased by only 10%, according to ADI, which analyzed 2.1 billion aggregated and anonymous search ad impressions (not including product listing ads).

“While the total real estate decreased, impressions decreasing by 10% may indicate that Google is aligning itself with a better consumer experience. These ads were likely less clicked or even ignored by consumers when compared to the top placements, and could have simply been part of the clutter,” said Becky Tasker, Managing Analyst at Adobe Digital Index.

In addition, the removal of inventory has resulted in a 17% increase in click-through rates (CTRs) for positions one to four, and a 39% increase in CTR for the very top search ad. Meanwhile, cost per click (CPC) is up only 2.1%.

“Removing the right-hand side paid placements has meant a small increase in price and better performance for larger advertisers, who can afford those top four ad placements,” said Tasker. “And then the smaller players, the ones that maybe aren’t able to compete or bid on those top placements, are being pushed down the page. The fact is, most people click on the top ads because they’re the most relevant or they’re the most eye-catching, and that’s why they’re the most expensive.”