Many jaws dropped, ours included, when Google confirmed at the end of last month that desktop search results will no longer show text ads in the right sidebar, leaving only four text ad spots at the top above the organic listings on the search engine results page (SERP).
So what does this mean for the future of PPC (pay-per-click)?
Well, we certainly aren’t fortune tellers, but here are our three predictions based on the new model, and the nature of PPC.
But first, let’s take a quick look at what’s changed and what hasn’t.
What’s New: The only change is that ads that used to appear in the right sidebar are now gone. (A few of those ads have moved to the bottom of the page). Essentially, this all translates into less “ad real estate”.
What’s The Same That Didn’t Change: Nothing has changed for mobile users. Ads still appear at the top of the page, like they always have. Also most people can still easily distinguish between a paid ad and an organic listing.
On to our predictions:
1. Higher Investment, Higher Return
The cost of PPC ads has gradually increased every year since they came into fruition. And it’s hard to say exactly how that will change over time.
But due to limited supply and high demand, PPC costs may skyrocket, potentially making it unaffordable for small businesses or businesses with narrow profit margins.
Previously, being a small, unknown business wasn’t a problem online because PPC provided a way to compete against big brands.
Google didn’t seem to play favorites, but looks like big companies with big PPC budgets will now have the upper hand, especially since the quantity of Google PPC advertisers is likely to dwindle.
The cost is increasing, but so is the benefit.
It stands to reason that fewer ads vying for visibility means a higher share of clicks per advertiser. So if you have the budget, having your PPC ad placed front and center on Google (with fewer businesses competing) is likely to yield higher click through rates (CTR), conversion rates, and ROI.
2. SEO and Social Media Will Become Even More Attractive
Cutting the PPC supply by two thirds and hiking up the price is going to force many businesses to consider other forms of Internet marketing.
We foresee many businesses investing even more in SEO and social media.
And this isn’t a bad thing.
While it may take more time to see results from SEO and social media marketing, there tends to be a higher ROI, and the results are more likely to stick and be sustainable (compared to PPC).
And it’s pretty much common knowledge that the lion share of clicks are on organic listings.
People know the difference between paid ads and organic listings, and searchers place more trust on organic listings in general. As such, they sometimes skip over PPC ads. This makes SEO pretty vital.
3. More Businesses May Switch to Bing and Yahoo
Those who need sales like yesterday will likely switch to running ads on Bing and Yahoo, which are currently still offering affordable PPC ads that show up on the right hand side bar.
Compared to Google ads, results on Bing and Yahoo have been mixed. But time will tell how that will shake out.
Why The Big Change?
The change to Google’s ad layout seems to be just one part of an overall shift in its’ business model that many have observed over the past nine months or so.
Google is now attempting, more than ever, to monetize many services that used to be free.
Google seems to be banking on the fact that so many people have become heavily reliant on its’ services, for both personal and business use. And it’s probably not an accident.
We believe that the shift in ad layout is just another part of that overall plan. Sure, it’s very self-serving on Google’s part, but that’s business.
Driving sustained revenue growth for a company the size of Google isn’t easy… and neither is keeping shareholders happy.
We don’t think Google PPC is dead (not at all), we just foresee it requiring more of an investment and still very worthwhile.
If done right, your PPC efforts may actually yield higher returns than before. Regardless of your budget, if you are savvy about PPC and know what you’re doing (or work with an agency who does), you can still get a great return on your money.
And if PPC becomes more expensive than you’d like, don’t fret. Be patient and keep working at it.
Regardless, there are other options, namely SEO.
Have you been running PPC ads on Google? Do you plan on shifting your strategy? How so? Please comment below.