You now have another reason to use ad extensions on your AdWords ads. Google revealed that it is now taking them into account in Ad Rank, which determines the ordering of ads on search results pages.
Ad extensions already made ads more useful to consumers by giving them reasons to click or interact (as with call extensions). That's precisely why Google is using them in ranking. After all, the more useful the better, right?
Historically, Google has only taken max CPC bid and Quality Score into account with Ad Rank. The expected impact of the ad extensions and formats that you use will be used as a third ranking factor. If two competing ads have the same bid and quality score, the extension factor could be the tie breaker.
In case you're wondering how Google determines "expected impact," it considers relevance, CTR, and prominence of the extensions or formats on the search results page.
Additionally, Google has increased the importance of Ad Rank itself for determining whether an ad should be displayed with with extensions and formats. Google says you might need to increase your Quality Score, bid or both for extensions and formats to appear.
"In each auction, we'll generally show your highest performing and most useful combination of extensions and formats among those eligible," explains Google software engineer Chris Roat. "So there's no need to try to guess which extensions will help improve your clickthrough rate the most."
"You may see lower or higher average CPCs in your account," adds Roat. "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."
The changes only affect ads that appear on Google search (for now).