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I ran two pairs of ads. Both ads from each set had exactly the same text except one of each had just the root domain name as the display URL, and the other of each had actual landing URL.
In both cases, the ads that showed the landing page URL had a CTR that was about 50% higher on average.
One of the pair did very poor, and had a CTR that was half of the other pair, but even in the poorly performing pair, the one with the landing URL did roughly 50% better.
I used keywords that were not very competitive, and lower traffic. Maybe 1000 impressions per day, give or take. Also the URL contained the keyword which I think is significant since google makes it bold faced and thus it sticks out more. The ads were not in the top three, but were on the first page - so they were well mixed in with the others. The others however, rarely (that I saw) used landing URL's on their ads, preferring to use their plain domain name.
I have received many good tips here and I wanted to share this information. Hope someone will find it useful. :)
What is the official rule around this? I know it's been around for a while, but I'm a little surprised it's allowed in the first place...
Is there a rule in place to disallow:
This is handled on a case-by-case basis. The essential priniciple at work is that we will disapprove ads in which the Display URL is used as an additional line of ad text.