You might not have noticed, but AdWords is working a little different since an algorithm update was quietly introduced on Tuesday. For the most part, not much is different, but there is a notable change in the ad extensions are now working as a factor in determining as positioning.

The update was announced in a blog which details all of the parts of the update. But, the big takeaway is that AdWords was updated mainly to take into account the new features that have rolled out over the past year.

Ad extensions now have an affect of how ads are positioned in Google’s search results. To show how this is working, Google gave the example of two identical ads with the same bid and quality score. With the update, the ad with extensions is more likely to appear in the higher ad position.

You may also see that a higher quality score, bid, or a combination of both also increases the likelihood of extensions appearing. Ad Rank also plays a similar role in deciding whether extensions appear.

As for what this means to marketers, Chris Roat, Staff Software Engineer for Google, says that Google expects ads with extensions to perform better and possibly see a lower cost per click with a higher click-through rate:

“You may see lower or higher average CPCs in your account. You may see lower CPCs if your extensions and formats are highly relevant, and we expect a large positive performance impact relative to other competitors in the auction. In other cases, you may see higher CPCs because of an improvement in ad position or increased competition from other ads with a high expected impact from formats.”

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