Enhancements to Google's Ad Offerings: Ad Models

  |  May 24, 2010   |  Comments

A look at Google's new ad formats and pricing models and what they mean for marketers. Second in a two-part series.

Last time, my column discussed enhancements to Google's ad targeting options. This week, let's examine changes to Google's ad formats and pricing models - and what they mean for marketers.

Ad Models

What it had before:

Historically, Google has only offered one form of ad pricing or buying model - CPC (cost per click). While CPM (define) pricing was made available on placements within the Content Network, this was the closest Google got to veering from its tried-and-true CPC (define) pricing model.

What it has now:

The CPC pricing model is not going away, but some new models built for key online industries have emerged. Two are currently in limited beta release:

  • Product Listing Ads: This model will dynamically show contextually relevant product ads based on CPA (cost per acquisition) pricing; you only pay when someone actually buys your product. These ads also show product images and pricing alongside the product name/text information, providing a more engaging and enriching user experience. This ad model is really geared to e-commerce retailers.

  • Product Comparison Ads: This model will dynamically present relevant offers to comparison shoppers looking for custom financial services quotes in real time. These ads are purchased on a CPL (cost per lead) basis; you only pay when someone actually requests a quote. This ad model is currently only available to mortgage and credit card institutions in select states, but it wouldn't be surprising if this gets rolled out to other industries soon.

What it means:

For retailers, these two new innovations will no doubt reduce wasted clicks and increase the return from their paid search investment. Buying on a CPA (define) or CPL basis is desirable, as advertisers will only pay when the audience takes the desired action. Richer ad experiences are also likely to result in supplemental benefits surrounding brand awareness, brand affinity, and offline purchase intent. Even though advertisers are paying only when someone converts, they benefit just by getting their brand/message in front of their audience.

Ad Extensions

What it had before:

Google's standard paid search ad is pretty recognizable, but just to level-set, it consists of the following elements:

  • Headline with 25 characters (max)
  • Two description lines beneath the heading, with 35 characters each (max)
  • A display URL directly below the description


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    patio sets. Buy now!

What it has now:

There are many new "extensions" that you can add to your current Google ads to make them more relevant and compelling for your audience. For brevity, I'll simply indicate the "addition" portion of the ad that is now present in addition to the regular copy/text:

  • Ad Sitelinks: Includes four additional deep-links into your site content

  • Product Extensions: Includes product images and pricing within your ad copy

  • Video Extensions: Includes embedded videos that can be expanded and played within the ad unit (e.g., movie trailers or product demos)

  • Location Extensions: Includes embedded maps that can be expanded and viewed within the ad unit (e.g., maps or directions to local businesses)

  • Click-to-Call Phone Extensions: In mobile ads, the ability to click-to-call is made available for local businesses if the user would prefer to call versus visit the website

What it means:

These extensions stand to substantially increase click-through rates and user engagement levels. Advertisers will now have more flexibility to include relevant non-text elements as images or video, location information, or additional site links. This will likely benefit the user as well as the ads. How? Ads will become more relevant and serve up information without requiring users to click into the website. As these ads are charged in the traditional Google way - CPC - advertisers are getting more real estate and better pre-click exposure for the same price. That said, as these ads are taking up more real estate on the page, competition may become more fierce for "above the fold" positioning, which could inevitably drive up CPCs. Regardless, this offering is definitely something advertisers should test to determine if they deliver enhanced ROI (define).

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Julie Batten

Julie is a member of the senior strategy team at Klick Health, focused on online media and digital. Julie initially established and led the media practice at Klick for several years, relinquishing leadership to expand beyond media into additional digital tactics. She brings a wealth of experience in search marketing, digital media, and all facets of digital strategy to bear, helping Klick's clients develop innovative digital solutions. As her role has evolved, so have her contributions to ClickZ, which she has been writing for since 2007.

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