Ad Extensions are Google's reward for good quality search ads. When an ad shows in the top three position on the Google search results page and the option op ad extensions is activated the ad may show extra business information with your ad, like an address, phone number, store rating, or more webpage links.
Why use Ad Extensions?
Ad extensions are a type of ad format that show extra information (“extending” from your text ads) about your business. Some can be added manually and others are automated.
Ad extensions tend to improve your ad’s visibility. They often appear above the search results, rather than along the sidebar. If two competing ads have the same bid and quality, the ad with greater expected impact from extensions will generally appear in a higher ad position than the other.
Better return on investment:
Extensions can help improve the clickthrough rate (CTR) of your ads. More clicks means more customer traffic.
How do Ad Extensions work?
AdWords shows one or more extensions with your ad when it calculates that the extension (or combination of extensions) will improve your campaign performance, and when your Ad Rank is high enough for it to appear. Adding an extension won’t guarantee that it will show with your ad, but you can keep track of when your extensions are appearing on the Ad extensions tab.
There is no cost to add extensions to your campaign, but you are charged as usual for clicks on your ad, as well as for certain interactions that extensions provide. For example, you are charged for clicking on a download button (app extensions), on a call button (call extensions), on a directions icon (location extensions), and so on.