With the reduction of ad space you can expect AdWords campaigns to become more competitive and click costs to increase. Your overall campaign costs are also likely to increase in this highly competitive layout; the same amount of advertisers will be bidding and will need to spend more money to get one of the 7 spots.
A decrease in advertising space in results means that SEO has become even more important. Ranking high in organic search is the best way to ensure that your website gets found.
The update is global - all countries will see the new ads positions.
Product listing ads aren’t going anywhere - in fact, they now have more space.
The update is focused on producing better results for commercial queries - commercial queries are people who search with a “strong intention to buy.”
The update could be to create a layout that is universal across any device - Google’s #1 focus is to encourage mobile-friendliness and responsive design.
“Your ad position is determined by your ad rank”
In order to determine your ad rank, Google takes into account your bid and a quality score. Quality score combines landing page experience, expected click through rate and your ads relevance. To improve the position of your ads for a specific term, you must either increase your bid or improve the quality score of your ad. Google tells you exactly how to do that here.
The ad with highest rank will appear at the top of the search results page, and the second beneath it etc.
Hughes & Co. helps businesses implement successful Google Adwords campaigns, connect with us here to talk strategy and implementation.