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Does SEO Win or Lose with Removal of Right Sidebar Ads?

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Last week, Google rolled out a revised desktop user interface without right hand ads.

This update has been widely reported by the media and many agencies. While many people believe that the Google UI has kept their iconic interface the same over the years, the fact is that they have rolled out hundreds of tweaks to the UI and even the way ads and organic results are displayed.

What Has Changed

The screenshots below compare a SERP for “criminal lawyer rockville, md” circa 2007 to the same search today.


Screenshot circa 2007


Screenshot from 3/1/2016

The screenshot from 2007 did not show any top ads which was unusual for the time but even if there had been top ads there would also have been one or possibly two organic results above the fold. The screenshot from today shows four ads at the top and the beginning of the map section. It is also interesting to note that some of the ads now receive six lines whereas they once had a maximum of three.

The UI changes will impact two areas:

Cost Per Click Will Increase

Now that there are fewer ad spots on the page, advertisers will need to increase their bids to get above the fold impressions. Other PPC experts have discussed that with the addition of the fourth ad spot and ads at the bottom of the page, the total inventory hasn’t drastically changed, but the lesson from mobile bidding is that you need to be in the top positions to get clicks.

Agencies and individual firms will compete more for the top spots and increase CPC. When cost per click increases that also increases the real and perceived value of an organic ranking because the adwords auction sets the value of keyword. This will be explored more later.

Organic Click Through Rates (CTR) Will Decrease

The SERP 3/1/2016 example shows four ads and the beginning of the local results map. A user would need to scroll down the page to find the organic results.

Before discussing the impact on CTR, It is interesting to compare the local results from 2007 to the local results now. Google has significantly increased the size of the map and the local results. The local pack change was introduced in August 2015 and decreased the number of first page local results from seven to three but at the same time increased the amount of screen space to show those results. This change had already pushed organic results further down the page.

Now Google has added a fourth ad slot for highly commercial search queries. The result will be that organic results are pushed further down the page.

Third party CTR data shows a rapid drop in the CTR as position increases. This winner takes all phenomena has been discussed extensively and is why top positions in Google are so valuable.


Source: Advancedwebranking.com/ctrstudy

While the exact impact on CTR will unfold in the coming months, the chart above shows that results lower on the page have a lower CTR and therefore a new fourth ad slot will more than likely decrease the CTR of organic results.

Value of Organic Rankings

If CTR goes down and CPC goes up, what will that mean for SEO? This question can be answered by the formula that many use to calculate the value of an organic ranking.

Monthly Organic Value = Monthly Volume x CTR of Position x Adwords CPC

The formula uses the cost of running an Adwords campaign as a proxy for the organic result. The Adwords keyword planner provides an estimated CPC (Cost Per Click) and monthly number of searches for a keyword. The CTR study above then provides an assumed CTR for that keyword. The product of the three values provides an estimate for the value of the position. In other words, an advertiser would be indifferent to paying a flat fee for that organic listing versus Adwords (even though there is no option to pay Google outright for an organic slot).

SEO is Here to Stay

Let’s revisit our organic value equation:

Monthly Organic Value = Monthly Volume x CTR of Position x Adwords CPC

The exact changes to organic CTR and Adwords CPC are yet to unfold but our guess is that Adwords CPC will go up more than the drop in organic CTR. If that is the case, then the value of an organic position will actually increase. That will make people more willing to spend on the programs required to improve rankings.

The increase in value of an organic position is also true for local SEO. More small businesses will seek ways to improve their rankings in the local 3-Pack.

Conclusions

While we are still a long way from a Google UI that is all ads, the most recent change by Google notches us one step closer. For people questioning the value of SEO, these most recent changes will only make the organic results more value to businesses. Here is what we see happening:

  • Adwords CPC will increase especially for competitive niches. Advertisers will be forced to ante up or get out of the auctions.
  • Organic CTR will decrease due to the new fourth ad on highly commercial search queries.
  • The estimated value of an organic ranking will increase because Adwords CPC will increase at a higher rate than the decrease in organic CTR.
  • Everything gets more competitive leading more businesses dabbling in SEO or PPC to make real investments or get out.
  • Map pack rankings are the low hanging fruit for small businesses but Google has already amped up the competition with their 7 to 3 Pack.
  • SEO is NOT dead!

Chad Hill, Semify CEO