Google recently confirmed a major shift in how ads display on desktop searches for commercial queries. We thought we’d share some insights on how we think this might impact dealerships who spend ad dollars on pay per click (PPC) advertising.

• First, let’s define “commercial queries” for car dealers: Per Google, these are keywords that show a heavier commercial or shopping intent. We ran a quick test and found almost all major keywords a dealer should buy have moved to the new format and are treated as “commercial queries”
• Lower Supply + Stable Demand = Likely higher Cost-Per-Clicks: The simple facts here are that for each Google search, there are now only 7 ads can appear on the first results page, as opposed to the previous 11. Basic economics dictates that if there is less supply (4 less ad placements available), and the same demand (the number of cars manufacturers are producing isn’t going down because of this change), your actual cost-per-click is going to increase.
• Your Bid and Budget Management tools/ philosophy just became that much more important: Both AdWords and tools like Kenshoo, Marin, Searchforce and Acquisio (depending on what your agency uses) offer a bid-to-position algorithm or a bid to CPA model. Most agencies have pivoted to setting a target for position 2 or position 3. You might actually find that bidding for position 4 gets you a slightly lower cost-per-click without impacting the volume and quality of traffic your ads generate. If your current provider does not use any bidding method or system – it’s high time you adopt one, otherwise, you are looking at a drop in traffic or being outbid regularly.
• Look at both your Average Position AND your Impression Share : Dealers that currently see their average position regularly in the top 3 may not have much to worry about. As we pointed out earlier, it might actually benefit you if your Quality score stays intact and your cost-per-click (CPC) drops should your ad move down to position 4.
• Curious to see if you’re going to be seriously impacted? Use the top-vs-other segmentation in AdWords: The simplest way to see if you’re really going to be impacted is to segment your campaigns in AdWords by “Top-vs-Other” and measure what percentage of your ads are not being served in the top spots (prior to Feb 15 th ). If you find that a large percentage of your impressions (greater than 30%) are coming from “Google Search: Other”, you definitely need to adopt a slightly more aggressive bid strategy.
• Bing Ads as an indicator: Bing tends to be the after-thought in many instances, however, Bing has been showing 4 ads on the top of the SERP for the longest time and in this case might actually prove to be a treasure trove of data at least to glean cursory insights. If you’re running campaigns on Bing Ads, it might be a good idea to see how traffic flow and metrics vary at different ad positions (including position 4). To do this, the best way is to use Bing Ads keyword distribution graph option and filter down to see the difference in traffic and CTR at the various average position levels.
• Stay Calm and focus on mobile first, diversify later: There will be a lot of blog posts written by folks in the space, some that might even point you to spending larger chunks on Bing, Yahoo or Facebook Ads. In all the hype and hoopla don’t forget the single most critical factor to the future of your business – the world and your traffic is going mobile. If you’re watching your analytics data closely you’ve already seen a massive shift in traffic patterns (in the case of our customers, almost a 60:40 ratio between mobile and desktop).

In conclusion, it’s important not to make hasty bid and budget decisions. No agency or in-house team has yet had a chance to collect a statistically significant sample size and form definitive conclusions about the impact of this change. We can only predict and estimate what the impact might look like. Our advice to dealerships is:

• Ask your SEM team about the impact. Have them show you the change within your metrics (CPC, Cost per Visit, Call, Lead, Acquisition, even Cost per Vehicle sold if your provider can track at that level—if they can’t give us a call!).
• Try testing different bid management approaches and have your vendor/ in-house team run a pre and post-optimization analysis. Dealers with small SEM budgets (less than $2500/month) need to be especially vigilant about how this change impacts their traffic patterns.
• Try investing more in Mobile Adwords Campaigns and see whether you can maintain or even increase your Cost per Acquisition by focusing more on where the consumer market is going.

We will be monitoring this closely across our own accounts and will publish more studies as a critical volume of data is available. Stay tuned!

If you’d like to chat with us further about this change, feel free to reach out to us at ppc@creationfantasy.fun or send us your questions via the form on this page.

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Aurko Chatterjee serves as the SVP of Product Development & Marketing at Happy Hao Car - overseeing the product management, UX, Data and Marketing functions. He joined Happy Hao Car 9 years ago and has played a role in building and shaping multiple teams over his tenure. Prior to joining Happy Hao Car, Aurko worked for Cox Automotive and Google Inc.

Join the discussion One Comment

• Butch says: February 29, 2016 at 8:01 pm Great stuff Aurko. Always learning from you. Reply

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