Google will soon rid itself of all AdWords along the right side of the rail for global desktop search queries. The move will decrease the number of ads shown, which will likely drive up cost for advertisers.
Additionally, Google said it will now show four ads at the top of search results -- up from three -- for high value search terms such as "car insurance," "home loans" or "Chicago hotels," for example. Moving forward, the right rail will either be left blank, feature Product Listing Ads or knowledge boxes. Ads will still be shown at the bottom page of search results.
The company said it will start rolling out the changes today.
"We've been testing this layout for a long time, so some people might see it on a very small number of commercial queries," Google told Ad Age in a statement. "We'll continue to make tweaks, but this is designed for highly commercial queries where the layout is able to provide more relevant results for people searching and better performance for advertisers."
Dave Ragals, global managing director for search at IgnitionOne, believes Google's latest move will increase the price the company charges for each ad clicked. "If Google's aim is to limit inventory, a main effect will be increasing competition for the top three or four paid slots on its desktop search," Mr. Ragals said. "Since being anywhere below those would mean the bottom of the page or off page one, it will increase CPCs across the board for those top slots."
Some feel Google's latest move aligns the mobile and desktop experience, as ads are not present along the right rail for the former.
"In terms of why Google could be doing this, it is possible that Google is trying to drive mobile spend by advertisers," Mr. Ragals added. "By reducing inventory on desktop, it can incentivize advertisers to spend their remaining budget on mobile, thus increasing mobile CPCs."
Valerie Davis, VP of search media at PM Digital, disagrees with that assessment and said Google risks upsetting advertisers with the changes. "If a user is searching on desktop, you want them to have a desktop experience. Google will be messing with something that has worked for a very long time," she said. "We already have some clients looking for alternatives to Google given the ongoing price increases. This will push advertisers to other channels and vendors, which I believe makes this an unlikely endeavor for Google."
Ms. Davis added that the elimination of ads along the right rail will impact her company's largest clients. "There will be a big movement for tier two, three and four advertisers who cannot afford top placements," she added. "While this move will most definitely drive up costs for advertisers, I believe it will also have a large impact on overall revenue for Google. Only time will tell."