Google posted on its blog post,  “we’re announcing improvements in the AdWords auction that let us more consistently show more relevant ad extensions and formats.”

Ad Rank improvements

Our system for ordering ads on search results pages uses a calculation called Ad Rank.

Previously, Ad Rank was calculated using your max CPC bid and your Quality Score.

With this update, Ad Rank will also take into account a third component: the expected impact from your ad extensions and formats.

In addition, we’ve increased the importance of Ad Rank in determining whether your ad is eligible to be displayed with extensions and formats.

Here are some more details and implications of these changes:

• Ad extensions and formats can now influence the position of your ad on the search results page. If two competing ads have the same bid and quality, then the ad with the more positive expected impact from extensions will generally appear in a higher position than the other.

 

• When estimating the expected impact of extensions and ad formats, we consider such factors as the relevance, clickthrough rates, and the prominence of the extensions or formats on the search results page.

 

• Because Ad Rank is now more important in determining whether your ad is shown with extensions and formats, you might need to increase your Quality Score, bid, or both for extensions and formats to appear.

 

• In each auction, we’ll generally show your highest performing and most useful combination of extensions and formats among those eligible. So there’s no need to try to guess which extensions will help improve your clickthrough rate the most.

 

• You may see lower or higher average CPCs in your account. You may see lower CPCs if your extensions and formats are highly relevant, and we expect a large positive performance impact relative to other competitors in the auction. In other cases, you may see higher CPCs because of an improvement in ad position or increased competition from other ads with a high expected impact from formats.

 

• For now, this update only affects search ads appearing on Google Search.

We’ve updated our Help Center articles on topics including ad extensions and how we rank ads to reflect these important changes.

Recommendations for using extensions

Extensions make your ads more useful and can improve your campaign performance. So you should add extensions that make sense for your business type and campaign goals. With these improvements to AdRank, our systems will do even more to automatically serve extensions in the contexts when they’re most beneficial.

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.

We’re always looking for ways to make ads more relevant to a user’s intent and context. After months of testing, we’re confident that these AdRank changes help achieve that goal by more consistently showing people the most useful combination of extensions and formats.