Ad extensions create more reasons to click your ad:

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.

Improved visibility: 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 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. Learn why extensions might not show with your ad.

Automated extensions: AdWords creates and displays the automated extensions formats (seller ratings, consumer ratings, social extensions, and previous visits) when it predicts that they’ll improve your ad’s performance. No setup is required, so the option to create automated extensions doesn't appear in the drop-down menu of the Ad extensions tab.

Different Types of Ad Extensions:

 Sitelinks
•    Location
•    Call
•    Social