Why is Google testing banner ads in search results?

I mentioned the testing of banner ads in my post on Google's search UI changes yesterday, but such a big change deserves more attention. 

In a nutshell, Google is testing banner ads on branded searches for 30 different advertisers, including Virgin America and Crate & Barrel. 

I've rounded up the views of several search marketers on the tests being carried out by Google...

Google and banner ads: what's the big deal?

Well, many people are seeing this as a betrayal of Google's principles, as Marissa Mayer promised in 2005 that:

There will be no banner ads on the Google homepage or web search results pages. There will not be crazy, flashy, graphical doodads flying and popping up all over the Google site. Ever.

Here's the example of the ad that has been circulating, for a search on 'Southwest Airlines': 

This has the effect of pushing other search results down the page, allowing these brands to dominate more space on branded search results pages. 

From the screenshot above, it does appear that the ad consists of the image and a repeat of the brand's organic listings, but Search Engine Land points out that the ad consists of the image only, which is clickable. 

If this is the case, you do wonder whether people would choose to click the image rather than the listings below, which would come more naturally to the average searcher.

Also, given the various stats on the effectiveness of banner ads, it seems to be more of a branding exercise than anything else. 

I asked some search marketers for their views on the trials...

Why is Google trialling banner ads in search? Do you think these will be limited to branded searches?

Andrew Girdwood, Media Innovations Director at LBi 

The search results are becoming far more visual and interactive. Google is looking to solve a greater number of queries in the shortest time possible and this even means search results that don't require searchers to leave Google. To compete with this visual ads become attractive and perhaps even necessary.

We had very big news with Ad Rank this week that changed the very core of how PPC ad placement worked. Google added in the importance of visual impact and interaction  of ads by looking at the effect of Extensions. It's no surprise that Google is testing large banners.

Baidu does something similar with branded responses and it can work very well. If Google follows the Baidu model then it'll be limited to brand terms. 

Dan Thornton, Founder at TheWayoftheWeb:

There are two reasons for Google to trial banner ads in search. The first is that constant testing is more of a core Google value to the company than a promise never to clutter up search results with graphics. And Baidu has been operating something similar for a while.

The second, less charitable, interpretation is that it wants to attract more spend from large brands across an expanding range of features to offset any erosion in Adwords advertising rates.

It makes logical sense to limit these to branded searches to avoid too many complaints from users, and to also avoid negatively impacting Adwords competition on product search results or more generic searches.

Julia Logan, SEO consultant (AKA Irish Wonder):  

I can see how these will be attractive as an option in AdWords for large brands, so it's possibly an extra source of income for Google, with possible premium pricing, or e.g. only available to big spenders.

My colleagues who used to be involved in building scraper sites back in the day are joking that Google has learned from us :-) The visitor enters a page where there is no other option left but click the banner: CTR through the roof, perfect monetisation model.

Pete Whitmarsh, Head of PPC at Search Laboratory:

They establish a massive dominance for the top result on a PPC campaign. It is an instant indication to a user that they are looking at the right listing and should click on it.

Additionally, it can't be overlooked that this will increase CTR of the top paid ad which is going to increase the revenue that Google make from these.

I feel it has to be limited to brand. If first position on a generic search started showing such a dominant listing then it would be almost impossible to compete from lower positions. It would just become a war of people trying to out-bid each other for top spot.

Since they are for branded queries at the moment, what is the benefit for the brands in question? Will they work?

Andrew Girdwood:

Banner ads add more brand strength to PPC engagement. They'll help also with attribution and analysis of banners.

I do think these banner ads will work. They'll be especially effective in the short term as searchers see them for the first time. Will they work in the long term? It depends on how expensive they are.

Dan Thornton: 

As these are existing brand searches, and the addition is simply a banner image to complement the existing organic search results, the main benefit is adding impact to the most desired result and links for a brand.

Although Adwords doesn't prohibit a rival attempting to advertise on a trademarked keyword, essentially Google is turning brand search results pages into a landing page for each business, with additional information pulled from Wikipedia, Google+ etc. 

Whether or not they work really depends on the objective for a brand. They probably won't harm the click through rates for the top search results in any case.

Ashleigh Brown, Senior Search Engine Marketing Manager at Browser Media:

They appear to take up a lot of space on the page so may attract clicks over the brand's organic listing, therefore making Google more money.

They will benefit the brands in question by taking the focus off the competitor's ads that are also bidding on their brand, but I would think they are more likely to be clicked on so, the brand's PPC spend should go up and number of organic brand clicks go down.

I'm not sure if it'll stick to just brand searches, if Google only shows the banners for ads in the top spot, that would encourage people to aim for that, and therefore make them more money so I wouldn't be surprised if they expand it to non-brand searches too.

Julia Logan: 

One thing I thought of immediately is how this will affect online reputation of said brands. The large banner is taking up most of the screen space, automatically pushing any non-brand URLs below the fold.

In the current form, there is little functional benefit in these banners, e.g. no possibility of any transactions without leaving Google, no real integration with the brand site in the SERPs, but there is a possibility that Google will be interested in moving in that direction, akin to its lead generating model in the finance related SERPs.

Pete Whitmarsh:

I think it could have a strong impact for brands with a large competition on Google. One major impact could be for brands who end up competing with their own resellers.

If they get the banner listing then they could start to dominate the SERP and steal a large percentage of the clicks from the competition.