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Yesterday I reported at Search Engine Land based on a discovery by James Carswell that Google was testing a new AdWords ad block in the Google search results.
The new ad block was "related ads" that expanded on the searcher's search query and showed ads for a different keyword. Here is a picture of what the ad block looked like:
Google confirmed yesterday that this is indeed a beta test. Google sent me this statement, which may clarify things a bit:
We're always experimenting with new features and tools to help users find information online. We're currently testing a feature on English language versions of the Google search results page in which additional advertisements for related queries or refinements of the user's original query may appear. This beta experiment provides users with a diverse set of relevant ads, and offers advertisers with relevant broad match keywords another opportunity to reach their target audience.
The closest thing I have seen to this in the past were related commercial searches placed in the AdWords section. But those were not ads, they were just queries that generated a new search result that lead to display ads in that section.
Forum discussion at Search Engine Watch Forums.
