In a quiet but not entirely unexpected move, Google has announced they are updating and improving the Google AdWords Ad Rank algorithm to take into account some of the new features they have rolled out this year, primarily their new ad extensions.

Ad extensions and formats can now affect the positioning of your ads on the Google search results page. Google uses the example: If two otherwise identical ads were to appear with the same bid and quality score, the ad with the ad extensions most likely to perform would appear in the higher ad position.

Ad Rank will also play a factor in whether or not extensions appear for your ads; Google notes that a higher Quality Score or bid (or a combination thereof) increases the likelihood of extensions appearing.

According to the announcement, ads with extensions Google expects to perform well may see a lower cost per click and higher click-through rate, while those ads without the benefit of their favorable projections could see their CPCs go up.

You may see lower or higher average CPCs in your account. 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.

Google is pushing advertisers to use extensions in their ads and now that it has an impact on Ad Rank, advertisers who haven’t added extensions will need to look at incorporating them in their campaigns.

Google also reminds advertisers the ad platform will automatically choose which ad extensions should be used, based on best CTR performance. Ad Rank will currently only affect advertisements placed on the Google search results page.

If you haven’t ventured into ad extensions for AdWords yet, Google also recently added some help pages to assist advertisers in learning about different ad extensions and how to enable them.