Google on Friday responded to criticism that recent changes to its search results have blurred the lines between ads and regular results, saying it will be experimenting with different designs.
As a part of a mid-January redesign to desktop search results, the company made paid links look more like unpaid results. The word "Ad" in bold text appears next to the advertisements, which typically are listed first and are therefore more likely to be clicked on and generate ad revenue for Google.
Ad search results have gone through several design changes over the years; for example, Google previously used yellow and green "Ad" boxes to differentiate search ads from organic search results. The latest redesign was an attempt to clarify sources of information, the company said last week.
But asked to respond to feedback on the changes, Google said it might move away from this latest design.
"We're dedicated to improving the desktop experience for Search, and as part of our efforts we rolled out a new design last week, mirroring the design that we've had for many months on mobile," a Google spokeswoman said in an email. "We are experimenting with a change to the current desktop favicons, and will continue to iterate on the design over time."
Google said the icons that now display a small brand image or the word "Ad" may not appear in new iterations but that the company will still label ads. The company said within the last year it has made more than 3,000 changes to search. Google said its goal is to create a better search experience for users and that they should expect the design to evolve over time.
The company also said it has business incentives to make sure users are satisfied with ads. It said when a user clicks on a Google Search Ad, the company wants it to be because the ad looked relevant and useful, not because it was confusing.
The backlash
Before Google said it would be experimenting on the new design change, experts told CNBC that while the redesign improves user experience, the latest iteration may be a response to a business need.
"We can talk all day long about user experience and results, but the elephant in the room is that Google is an ad business too, and there's a big profit consideration to how they alter the search landscape," said Heather Rist Murphy, vice president of performance content at digital marketing agency Nina Hale.
"In the last two years, on the organic side, the company has played around with the model, and at the end of the day, they are going to add to their bottom line," Murphy said.
Google currently faces antitrust probes into its ad business and questions from lawmakers about how it handles its users' private information. And with regulations such as GDPR and California's new privacy act, along with Google's announcement it's ending third-party cookie support within two years, Google and other rival digital ad platforms will need to think about where to grow, especially since the ability to target, measure, attribute and optimize could be limited, said Chris Apostle, chief media officer at digital agency iCrossing.
The redesign is already garnering scrutiny from legislators: The Washington Post reported Friday that Sen. Mark Warner, D-Va., accused Google of blurring the lines between paid advertising and search results, calling it "yet another example of a platform exploiting its bottleneck power for commercial gain, to the detriment of both consumers and also small businesses."
Google originally said the new look is an expansion of an announcement it made last summer, which would introduce the redesign to mobile searches. But the new design launched on desktop searches last week, sparking confusion among users and press who noticed.
The redesign comes as Alphabet has shown signs of preparing for a slowdown in its core digital advertising business, which still accounts for the vast majority of its revenue. Ad revenue slowed in the company's first quarter of 2019 and profit declined in the third quarter compared with the year prior.
After Alphabet came up slightly short of earnings-per-share expectations in its last earnings report in October, the stock dipped, but it has since rebounded. At this point, Wall Street is still bullish on the company's ad growth, which contributed to Alphabet achieving a trillion-dollar market cap for the first time last week.
Here's an example of what the redesigned search results look like on desktop:
A rise in clicks
Since Google's most recent change, Nina Hale found from its clients that the number of times Google users clicked on ads increased by 17% compared with the first half of January.
Firms Jumpshot and Sparktoro jointly saw a 15% increase in the number of clicks on mobile ads in 2019 versus before that launch. Sparktoro co-founder Rand Fishkin told CNBC he expects desktop ad click rates to show a similar rise over the next several quarters.
"The new visual format of organic search results closely mimics how the ad label looks in order to obscure a searcher's ability to distinguish between the two, thus increasing ad click-through rate," Fishkin said. "My theory on why this took so long to get to desktop: Google knows it obscures ads and thus increases ad click-through rate and wanted to wait until a quarter in which they needed to show that growth."
Jonathan Kagan, the VP of search at Marc USA's media agency Cogniscient Media, said he wouldn't be surprised if the visual change was an attempt to increase the proportion of paid media-driven Google clicks. "My gut tells me they're trying to help close that gap," he said.
Kagan said he's seen a slight uptake in click-through rates in categories with more immediacy, such as quick-service restaurants, in the limited time since the new design launched. But other categories that are longer, drawn-out research topics such as health care haven't seen much of a change in click-through rates or cost-per-click, he said.
The other side of the coin
Gareth Cleevely, VP and head of search at performance marketing agency iProspect, said in an email that organic listings are "just as much of an advert" as paid ad counterparts "with multi-million sums of money spent annually by a company to ensure" its website is optimized to appear high in Google's search results. He said the marketing landscape is more blurred these days and that Google's update is a reflection of that.
"I fully comprehend that there is a psychological barrier of distrust when it comes to any form of advertising (social media, coupon books, email, etc.) as people treat it all with skepticism," Cleevely said in the email.
But he said that's something his agency and Google hope to change.
"Google values a great user journey so much that advertisers will be punished in the form of higher costs if their advert is not relevant to what the searcher is looking for," Cleevely said. "It is naturally in every marketer's interest to be as clear and transparent as possible with all forms of advertising."
Ad or not, in many cases people are just going to click on the thing that appears to be what they're looking for.
iCrossing's Apostle said 80% to 90% of traffic from search engine results pages have historically been from users clicking on organic results.
"In the end, the searcher is going to engage with the results that most closely match (or appear to match) what they are looking for ... regardless of whether it is an ad or an organic listing," Apostle said. "The stronger the site optimization, the more likely the organic results are going to most accurately answer the search. However, with the new way paid and organic results are presented, that dynamic may shift a little bit."
