Google is the number one search engine, so any change to its algorithm and layout have widespread implications for both consumers and search marketers. Whether you’re a performance marketer, PPC specialist, or SEO professional, you must have noticed last month’s changes to the paid links layout on Google’s SERP. This layout change limits the amount AdWords search ads on desktop, while ensuring the ads are displayed on prime locations above and below the organic results.

Previously, a search query on Google could generate as many as eleven text ads, with up to three displayed above and below the organic search engine results, and up to five ads were displayed on the right sidebar. Now, the amount of paid placements available on the search results page is limited to seven, with up to four appearing in the prime location above-the-fold and organic results, and up to three ads displayed directly under the search results.  

Google Search Engine Results Page New Layout March 2016

This layout change has sent shockwaves throughout the search marketing world, as the limited amount of ad placements available and their prime location can affect advertisers in many ways, from impressions to CPC and CTRs, to average position, and more. The limited amount of ad space, coupled with the possibility of four ads dominating the above-the-fold real-estate, suggests that the increased competition will cause paid impressions to be cut while ad costs and CPCs increase. But what about click-throughs and CTRs?

We, at Jumpshot, decided to investigate the preliminary effect of this change on the distribution of paid and organic click-throughs from Google SERPs, as well as analyze industry-specific impacts. Read on for our data-driven findings.

Click-Through Methodology and Results

To understand the impact of the recent Google SERP layout change we had to first identify high volume keywords, defined as highly competitive keywords with multiple bidders that fill up all the ad placements available. We identified 400 such high volume keywords from various industries, the likes of  “cheap flights” for travel, “laptops” for consumer electronics,“free movies” for the entertainment industry, and more. We then compared the performance of these keywords in driving paid search traffic, before and after the layout change rolled out.

According to Moz, in the months leading up to Google’s official confirmation of the SERP changes (on February 19) only about one percent of the SERPs that included top ads displayed the new four ad layout. The exposure to the new layout then grew to account for nearly a fifth of the relevant search engine result pages on February 18th and accounted for more than 36 percent on February 22nd.

Jumpshot’s organic and paid keyword click data reflects that the share of SERP clicks driven by paid search almost doubled from February 25 to March 8. In this time, the percentage of paid click-throughs grew by an astonishing 92 percent, from 8.4 percent on average in the two weeks leading up to February 25 to 16.1 percent for the following two weeks.

Distribution of paid clicks from Google before and after the February 2016 layout change

However, this vast surge appears to be short-lived, as from March 9 onwards the paid click-throughs decreased from 16.1 percent to 11.2 percent, so that the overall increase in paid clicks stands at 33 percent after the four ad change went into full effect.

Industry Specific Impact on Paid Search Traffic

Our findings might alarm search marketers, as they indicate that AdWords PPC rates will rise as allocated placements declines and CTRs increase. However, they also reflect that the extent that this layout change impacts SEM differs by industry. We analyzed industry specific Google click-throughs to map out the industries that were impacted the most by this SERP change, here are our findings:

  1. The extremely competitive Retail and Consumer Electronics industries, which account for nearly half of all of the high volume keyword click-throughs researched, experienced the strongest increase in paid clicks-throughs from search. Between February 25 and March 8, the average click-throughs from paid search increased by 230 percent, from an average of 5.3 percent in the two weeks prior (to 17.4 percent). Then, following the general keyword click trends detected, paid clicks began to decline on March 9 until they reached an average of 7.6 percent, bringing the overall increase in paid clicks to 44 percent.
  2. The second largest increase in paid click-throughs goes to the Entertainment and Streaming vertical, which saw an average increase of 30 percent in click-throughs from paid search.
  3. Third place goes to the Travel industry, which relies most heavily on paid search traffic and accounts for just under one third of the click-throughs from search for the terms studied. Following the SERP layout change, paid travel terms experienced an initial click-through surge of 16.7 percent that has remained relatively steady.
  4. Last but not least is the Insurance and Finance sector, which experienced a minor 7 percent increase in clicks driven by paid search. It is interesting to note that this sector is the second most reliant on paid click-throughs from search, which account for an average of 18 percent of the search traffic.The impact of Google's February 2016 layout change on paid clicks, by indusrty

Bottom line:  Search marketers understand that any change Google makes seriously impacts their budgets, metrics, and sometimes even their KPIs. Based on Jumpshot’s competitive keywords data and preliminary analysis, this recent SERP layout change will raise AdWords PPC rates as both the competition for the available ad spots and the paid CTR rates increase. However, the extent the paid clicks increase due to this change vary by industry, with retail and consumer electronics seeing the largest increase in paid clicks. Only time will tell how this change will affect SEM strategies in the long run, and SEO professionals will adapt to this above-the-fold takeover by paid ads. We will continue to track the SEM and SEO impact of this layout change, so stay tuned!