Expanded ads are live - how are they performing?

Earlier this year Google announced the release of expanded text ads, just one of the many big changes to hit AdWords. The standard 25-35-35 character limits were ramped up to two impressive headlines of 30 characters each, plus a new extended description line of 80 characters.

Launched in July, Google originally set a deadline of October 26th to upgrade all text ads. However, if you’re still testing, have no fear as the upgrade has now been pushed back. Advertisers have until January 31st 2017 to make the transition and get to grips with ETAs once and for all.

What we’ve seen from Expanded Text Ads

The new format promised bigger ads, but would they be better? With a few months’ worth of testing and observation behind us, it’s time to take a step back and analyse performance.

Higher click through rates

Well, mostly. The consensus is slightly mixed amongst advertisers but on the whole CTR is on the rise, sometimes by as much as two or three times those of standard ads.

Within a single campaign we’ve personally seen CTRs for expanded text ads far outpace those of standard ads. This is good news when it comes to ads for products that have historically suffered from low traffic and CTRs, and we expect to see figures increase over the coming months as we continue to test and optimise the new ad format.

Higher click through rates isn’t necessarily ground breaking news however. With even more characters eating up search page real estate and providing an larger clickable area, many suspected that an increase in CTRs would be the bare minimum we could expect from ETAs.

ctr

But what about branded ads?

Interestingly enough there has been some indication that branded ETAs have experienced minimal or even negative impact, while non-braded ads have seen a more significant rise in CTRs.

For the same client we compared standard and expanded brand ads and found similar CTR increases to non-branded campaigns; increasing from a CTR of 30% in August to 55% in September. While our own findings don’t support those from some advertisers, the differences do highlight one trend that has been consistent with expanded text ads: mixed results.

Most have a seen a rise in CTRs all round, but this hasn’t been the case with everyone. If your own click through rates aren’t showing quite the same results, don’t worry. Ad servings are still a bit random, with ETAs as a whole receiving a much lower share than standard ads. As advertisers work to optimise expanded text ads, we expect ad servings and CTRs to continue to rise.

Higher costs

Again, many have reported their expanded text ads outperforming standard ones; with lower CPCs and even CPAs.

Just like the results, the predictions for ETAs effects on cost were mixed and uncertain. Would the knock on effect of higher CTRs include better quality scores and lower CPCs? Would more overall clicks simply mean more traffic, not necessarily better traffic, with a higher overall cost and little improvement on conversions?

Additionally advertisers have had to go back to the drawing board in terms of ad copy and optimisation. Many are working from the ground up to figure out how to effectively use ETAs, hardly a short process. In the meantime quality scores and ad ranks may suffer, triggering even higher CPCs.

Overall expanded text ads for the same non-branded campaign mentioned earlier have had higher CPCs from the very start.

Not exactly the brilliant news we were hoping for.

cpc

However, comparing the percentage increase in CPC from September to August for both expanded and standard ads reveals more. ETAs seem to be slowing compared to standard ads, with an increase of just 0.02p, suggesting that they could start outperforming STAs in a few months.

While these results look promising, we don't think expanded text ads have been running long enough to conclude anything with complete certainty. The best possible outcome is that the rise in average CPC continues to slow for expanded text ads, and eventually decrease thanks to better CTRs and improved quality scores.

So, if you’ve been seeing higher CPCs for your expanded text ads we wouldn't panic just yet. Keep an eye on the rate of increase and use this to help you forecast where you think your CPC might be heading.

Higher conversions

For most of us this is the most important metric. Would expanded text ads actually have positive impact on conversions and ROAS, not just AdWords metrics?

As with CPC there hasn’t been a huge amount of data to go on, so while we can draw some conclusions it’s probably too soon to say anything for certain. Still, we can look at the difference between August and September and see the drop in conversions for standard ads as ETAs leap forward. While to date standard ads have a slightly higher conversion rate than expanded ones, the increase month on month suggests we could see this change by the end of October.

And we haven’t been the only ones to see a positive impact on conversions. So far some advertisers have even seen ETA’s already overtake their standard ads, with conversion rates as much as 20% more for expanded text ads.

conversion-rate-2

With even more characters to get the message across, it could be that advertisers are able to convey a better and more targeted ad. So, if users know more about the features and benefits of the services/products offered, and the landing page backs this up, an increase in conversions seems like a natural result.

A word of caution however, a conversion spike at the start of ETA testing isn’t a sure indication of conversions to come. As has always been the case with standard ads, advertisers should continue to rigorously test and retest expanded ad copy with varying messages and USPs.

But what if your conversion rates are lower than standard text ads?

Higher returns

When first rolled out, advertisers and agencies alike questioned whether expanded ads would result in lower conversion rates. There was however never any guarantee either way as conversions rely on a range of factors, not all of which are within the control of AdWords. If CTRs were expected to rise and if conversions continued at the same rate, it potentially spelled trouble for CPA.

Even if your conversion rates are lower, don’t discount ETAs just yet. While conversion rates may seem like they’re underperforming, it may very well be a consequence of a spike in CTR’s, with conversions either staying at the same rate as before or just increasing at a much slower rate.

To get a better idea of how our expanded text ads were directly affecting our client’s businesses we took a look at the ROAS for both expanded and standard ads, with surprising results.

roas

Unlike CTRs, which took off immediately for ETAs, conversions are slower to catch up. It was not until September that a huge spike in ROAS is seen, and across both months expanded ads are far exceeding standard ones for return on ad spend. Sound promising?

Even more promising is a look at ROAS for the first four days of August, September and October. Both August and September showed no conversions for ETAs, while so far in October they are outperforming standard ads which currently have no conversions. This suggests a pretty substantial rate of increase for ETAs despite taking over a month before making even one conversion.

Across both months ETAs are showing slightly lower conversion rates but a much higher ROAS for the same campaign, so if you’ve been disappointed so far with conversion rates it may be worth taking a closer look.

What now?

Despite some mixed results all round, generally the forecast for expanded text ads remain optimistic. As expanded text ads continue to receive more serve share and CTRs increase, we can possibly hope for lower CPCs and higher returns.

The next step for many is to continue to test and compare expanded text ads while starting to roll out ETAs across accounts in time for the new deadline. In the meantime here are some quick tips for making the transition.

  • Label both ETAs and standard ads so you can keep comparing and analysing results as you go.
  • Don’t forget your standard ads. If your standard ads are currently performing better than ETAs then keep optimising them alongside expanded ads so you’re not missing out on important clicks and conversions while you perfect your ETAs.
  • Ads are still only part of the whole picture, so make sure you're optimising ad extensions and landing pages as well as experimenting with ad copy.
  • Don’t panic! If your ETAs are still underperforming then keep testing and experimenting with ad copy and remember that you may not have enough data to go on yet, so hold off on jumping to too many conclusions.

If you’re feeling more than a little overwhelmed by the thought of making the switch, or want to know more about getting the best results from your expanded text ads, contact one of our team today. 

Katy Smith

Katy Smith

Digital Marketing Executive

Katy is a Digital Marketing Executive at Netmatter with a degree in Marketing. She has so far gained experience in various areas of marketing including email, copywriting, social media and SEO.

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