Hey Everyone,
First off, QS has not changed. Ad Rank is still QS, bids, and ad extensions.
Google has played with doing this several times, the first time 3+ years ago. One of the reasons, other than bringing the SERps in line with mobile, is that bottom ads actually have better CTRs than side ads overall (that's a weighted average of the entire sidebar, not just top right rail vs the entire bottom). In addition, the ads will be more consistent. Right now the side ads don't have sitelinks, callouts, etc - so they look very different from the top/bottom ads. By only using wide ad formats, all the ads will have a similar feel.
I think there will be some winners & losers overall:
Winners: - heavy ad testers, you no longer have to figure out if your sitelinks were showing, not showing, etc. The ads are now consistent.
- people who have a bid system in place. It's easy to get into a bid war unnecessarily, and with fewer ad slots, its going to happen more and more; so those who let math dictate parts of their account over emotions are going to do OK; but they might get less conversions from search as they get fewer clicks
- position 4 ads: The ctr on position 4 is skyrocketing. Depending on the keyword, position 4 is going to have a 400%-1000% CTR increase.
- ecommerce: Expect to see more shopping ads on a consistent basis.
Losers: - Aggregators: Often the large SMB premier partners want to show 'proof of advertising'; and having less ads on the page is going to make that harder. With fewer ad slots, those who are managing 10-20+ companies in the same geo vertical will have problems as there are less ad impressions to go around.
- Low sophistication advertisers in competitive verticals: With fewer ad slots, advertising becomes more competitive, and those who are bidding just to show vs bidding for a business purpose are going to eventually run into issues.
- Low margin businesses/arbitrage: The 1st page bids will be higher with fewer ad slots; so companies with thin margins are going to have a lot of words fall to page 2.
Unaffected: - Brand based bidders
- Niche companies
- Any display & video campaigns
- Primarily mobile advertisers. Mobile got another ad slot last year.