Today, Google announced a change to Ad Rank, its ad serving calculation in AdWords that determines where your ad shows and how much you’ll pay per click. In addition to max CPC bid and quality score, Ad Rank will now factor in the expected impact from ad extensions and formats. Ad Rank is also becoming a bigger factor in determining whether ads are eligible to display with extensions and formats.
What do these Ad Rank changes mean?
Extensions and formats now play a role in the price you pay per click and in the position your ads display.
Google wants advertisers to use all the available extensions that make sense for their businesses. “Ad extensions typically improve clickthrough rate and overall campaign performance because they make ads more useful.” Better click through rates for you mean more ad clicks for Google. The company “will do even more to automatically serve extensions in the contexts when they’re most beneficial.” Advertisers don’t have to (or get to, depending on your point of view) worry about having the right combination of extensions display for a given situation:
For example, consider someone downtown searching on a mobile phone for “auto repair.” In this example, the user might be most likely to respond to your ad when they can click to call a phone number or tap a link to get directions to visit in person. So we may show a combination of call and location extensions with your mobile search ad.
Now imagine if someone were searching for “auto repair” on a laptop computer in the suburbs. Say your ad earned the 3rd ad position above the organic results in this auction. We might show your seller rating and sitelinks because that’s the highest performing and most useful combination of extensions that could be shown with your ad in this particular auction and ad position.
In addition to serving extensions according to context, Google says it will automatically show the highest performing extensions and formats, meaning those expected to yield the greatest click through rates. [Update: this sentence has been edited for clarity, see comments below.]