The news really hit me by surprise and the 1st thing I remembered was this post in 2011 where Google was doing some A/B split tests by removing RHS Ad space. Now why in God’s name would so much of highly relevant premium ad space ( highest form of pull intent in the digital world ) be suddenly empty! So if you do the math of total click cost lost on ad positions (4-11) averaged out across verticals vs the delta rise ( due to increased competition ) in click cost in ad positions 1-3 or 4 (for “highly commercial” ad queries ( killed SEO right there! #GoingBelowTheFold )), it may be a win-win for Google.
Now don’t get me wrong here, Google is always doing it for the greater good, and I’m sure the Robin Hood works here as well. So I put on my thinking cap and started pondering why would Google remove RHS Ads? Some effects & results these may have-
1. The PLA alternative for Lead Generation Businesses
So imagine this, when you set up a display campaign on Adwords say for a BFSI business, and in the campaign settings, there was a “push” and “pull”option. Now say you tick “pull”, and then insert keywords like “buy life insurance online” or “buy term insurance” ( which fyi are very costly costly, some INR 250+ per click in top 3 ). Then say you add your display Ad creatives ( not text ads ). Now when users enter “buy term insurance”, they see the 3-4 text ads on the left & some of your Ad creatives on the right-hand side along with others who are also bidding for those display spots on the right side of Google SERP ( because it’s empty now! ). So if you really want to draw a parallel, it’s like the next level affinity to SCM ( Search Companion Marketing ). Wouldn’t that be amazing for BFSI guys who are losing out a sizable portion of their revenue due to the kill of RHS Ads, aren’t they? Let’s see how in the next point.
2. Why BFSI & Lead gen mid-sized guys are in trouble
So when we were running digital lead campaigns for this BFSI giant on their new insurance policy, we were getting CPLs of around INR250+, and after 3 months of data, we figured that bidding strategically in 4-7 spots gave us a CPC of around INR 140, this cost cut was also due to optimizing on certain keyword themes & match types. After driving heavy optimizations on peak hrs, Geos, device types, RLSA we figured that our CAC ( Customer Acquisition Cost ) costs were still around 72% of the revenue. This was however, discounting the cross-channel attribution from organic traffic, considering which our CACs were around 35%. In either case, we could only extract X amounts of leads from these niche ad position targetings & when it was decided to scale up, we had to look at incremental channels at incremental lead costs. Point is many banking, travel & listing mid-sized companies would have budgets around the INR10-15L/month. These would have to compete with the giants with INR1Cr+/month budget, who have their top of the page ranking automated rule set & are ready to pay exorbitant amounts even if it leads to a -ve 30-40% CAC over revenue.
3. What else can Lead Gen businesses do? How will it impact CAC/Revenue?
So continuing from the last point, these lead gen businesses now have to either start competing with the front liners to show their face on the photograph, spiking higher CPCs of 40%, where as conversion rates would not change much. The CAC will kill the CMOs! The other angle is move these budgets to display or social. Now let’s think logically, display of any kind, be it affinity or topics ( not remarketing ) has on an average less than 1-2% click conversion rates. Same with Facebook lead campaigns. So even if CPCs are 1/10th, then we have a 2X rise in CACs again! Further, would Google really allow any market share to move to Facebook ads, I doubt. Maybe this could also pave way for stronger remarketing campaigns but that will not be able to balance the top of the funnel branding costs that it would require initially to pull the traffic to the site. So ya, this change is definitely the 1st of many.
4. The Pretty picture for eCommerce?
So I was talking to PLA gurus at my agency, and they were like, it makes more sense to talk with numbers like SI Shares on Search & then correlate with PLA rise. But theoretically, for eCommerce guys with entire product catalogs, there would be pockets again where they were getting steady revenue streams from 4-7 positions on certain product segments. It’s very important for businesses to map these out and push PLA heavy for these segments so that there is no revenue drop overall.
5. The PLA “Expansion Concept”
There could be new Ad formats lined up for PLA, we could either start seeing an entire scroll of PLA ads on the right hand side to the bottom of the page. But I’m sure Google will make this space more dynamic, personalized. So maybe, and this is where the maybe section starts…PLA could now start havig bifurcations based on bids. Currently you really can’t control bids to tweak your Ad positions in those small square boxes, based on the inventory density one or more of your products appear. So imagine 3 sections on the right hand side ( shared the image on how it may look at the top of the blog ). Where the 1st could be 2 to 3 PLA ads which have the highest bids, with bigger images & more highlighted product descriptions. This could be followed by a 8 to 16 tile PLA Section with normal images. This leaves space in the bottom right hand side section where there could be product ads as videos coming up. This concept is basically bringing more of the eCommerce Store on Google SERP!
Really excited to see how this change is going to impact SEM overall, as the data pops we’ll get to see how revenue pockets truly get impacted. We also got some top folks in house & compiled their thoughts on Goolge RHS Ads removal talking about CPC effects, search strategies & impact on industry, so feel free to share your thoughts! 😀