February 12, 2009
How To

Branded PPC: Search Ads Can Offer Great ROI, Along with Some Challenges

SUMMARY: You have a solid SEO strategy. So, is bidding on your branded keywords for these affordable and flexible ads a waste of money?

Branded pay-per-click keywords can offer great ROI, push down competitors’ ads and present some challenges as well. Includes exclusive data from MarketingSherpa’s 2009 Search Marketing Benchmark Guide.
A solid SEO strategy often will get your website to the top of results pages for searches containing your brand name. Some marketers use this ranking to justify not bidding on their brands for paid search ads. After all, you’re already the top organic result for a branded search. Why spend money on ads when searchers can click on your organic link for free?

That sounds logical, but it’s not always the case. Bidding on your brand name can provide value. The ads can push down your competitors’ ads on search results pages. They can be easily changed to highlight a sale. And they can be a really inexpensive way to add value if traffic and revenue rise incrementally.

Discover the benefits that branded terms can bring, the challenges they present, and tips for using them.

Benefits of Branded PPC

Relatively Low Cost

Bidding on branded keywords can be cheap – depending on your brand name and your industry. Look at this exclusive data from the MarketingSherpa 2009 Search Marketing Benchmark Guide.

o Cost Per Click by Keyword Type
-High-performing brand term CPC
Average: $1.83
Median: $1.00

-Low-performing brand term CPC
Average: $0.85
Median: $0.38

One-of-a-kind brands generally benefit from lower CPCs on branded terms.

George Michie, Principal, Search Marketing, The Rimm-Kaufman Group, and his team manage search for 100 to 120 retailers with an average annual paid search spend of $1 million each. Most of his clients pay between 5 cents and 10 cents per click on branded search ads, he says.

Ian Lurie, President, Portent Interactive, says his clients with unique brands pay between 10 cents and 25 cents per click.

“In terms of click fees, the conversion rates are so high that, relatively speaking, it tends to be 1% of what a retailer spends on advertising,” Michie says.

o Generic brand names

Steven Broussard, Director Marketing, Golfballs.com, does business with a common brand name.

“My name is what I do, it’s the foundation of my business,” he says. “I don’t look at the word ‘golf ball’ as a brand term that I have to bid on. I look at ‘golf balls’ no differently than I’d look at ‘drivers’ or any other product line. It just happens to be my name.”

Since ‘golf balls’ is so common, Broussard sees higher CPCs on his “branded” terms. His average CPC is 78 cents for phrases, such as ‘golf balls’ and ‘golfballs’ in broad, phrase, and exact match, he says, and he receives about a three-to-one investment on the terms.

High ROI

People searching your branded terms are more likely to visit your site than if they search for a generic term or a competitor. That occurrence, coupled with the high-quality score and the low CPCs you can get with your branded terms, typically equals great ROI and conversion rates.

“One client is getting 17% conversion on a typo of their brand name, and they’re getting 19% conversion on their brand name in paid search,” Lurie says. “So they’re paying maybe 25 cents a click, and their per-visit value, their per-click value, is $8. It’s a radical return on investment.”

Broussard says that one of his “hugely successful” search campaigns targets keywords around personalized golf balls. It runs during the holidays and around Father’s Day.

“By far, that is my flagship campaign. Even during the non-holiday seasons, it ranks near the top,” he says.

Push Down Competitors’ Ads

Bidding on your branded keywords can combat your competitors' ads because your ads are more relevant. That gives your ads a higher-quality score, lower CPC and better position. For many brands, the quality scores for branded terms should be so good that their average CPCs are a pittance, compared to their other terms.

Bidding on your own branded terms also can push some of your competitors’ ads down, below the fold, or onto the next results page. You’ll likely snatch a few clicks away from them, and you can get the top ad positions more easily and affordably than they can.

If you have an affiliate program, bidding on your branded keywords will also help you sell products without having to pay fees to those who are likely bidding on the same terms.

More Control Over Messaging and Links

You have more control and can change the messaging in your paid search ads more quickly than in your organic links. This is important for marketers with good copywriting skills. Your paid search ads can emphasize a sale or the number of days left in an offer.

You also have more control over the links in your paid search ads than in your organic results. For example, if you created a microsite for a new product, that site might not be ranking well in organic results. But you can easily link to it from a paid search ad. You cannot simply change the URL of an organic link or redirect users without SEO consequences.

Challenges in Branded Keywords

Agency Fee Structure

If you’ve outsourced your paid search program, you should not have to pay huge agency fees on revenue generated through branded search. You’ve done most of the hard work already.

“Most of the folks who are searching for a retailer by brand name are doing so because they’ve been driven by other advertising, or by word of mouth, or by their own history with the brand.”

“Click fees to the engines are going to be relatively small. It’s the agency fees that you have to watch out for,” Michie says.

o Pay by spend, not by revenue

Paying an agency based on the amount of money it makes for your company makes sense. But it can be the wrong structure for paid search. Branded searches are driven by marketing that has little to do with an agency’s work. Also, branded ads are among the least expensive and best converting.

“The real work of paid search is on the non-brand stuff,” Michie says, adding that he sees about 99% of paid search spending done on non-branded keywords.

Generic Brand Names

Having a generic brand name can be great for driving people who search for a product to your site. If your website is CarMirror.com, and someone searches for ‘car mirror,’ there’s a good chance the searcher will click on your organic link.

However, there are two sides to the search coin for generic brand names. CPCs for generic terms, such as ‘car mirror,’ are likely to be higher than a unique brand name (e.g., ‘AutoZone,’ if it’s your brand name).

This is the position Broussard finds himself in at GolfBalls.com. His CPCs are a little higher for keywords that include ‘golf ball’ than the CPC other brands pay for their branded terms. He handles it by ignoring that his brand is ‘Golf Balls,’ and treats the term like any other keyword.

“If the phrase ‘green grass’ would affect ROI positively, it would be part of my keyword campaign,” he says.

Affiliates, Distributors and the Competition

You will not be the only organization bidding on your brand. Here are three of the usual suspects and ways you can deal with them:

o Affiliates, hands off

Your affiliates sell your products, so they’re likely targeting the same types of keywords. This drives up your CPCs and fees paid to affiliates.

Some marketers avoid this issue by forbidding affiliates to bid on their branded keywords. This prevents affiliates from piggybacking on your other marketing efforts and makes them work harder to find new customers.

“We advise all of our clients to keep everybody from bidding on your brand to the extent possible,” Michie says.

o Play nice with competitors

Competitors will often bid on one another’s branded keywords, sparking a bidding war. Some larger and well-established firms are willing to play nice, Michie says. Sometimes, a simple email or phone call requesting that you not bid on one another’s brands is enough.

o Distributors

You may also compete with your distributors on branded keywords. To determine if you should care, find out if the ROI of a direct order generated through a branded paid search is greater than the ROI of a customer purchasing from a distributor.

o Don’t get carried away

If you notice your CPCs getting higher and higher for branded keywords, you can fight back. But remember that you likely have the highest-quality score.

“I would never say, start doubling and tripling your spend, just to keep that number-one spot for your brand name,” Lurie says. “I just don’t worry about it that much because, eventually, the quality scoring is going to catch up with your competitors, and you’re going to end up back at the number-one spot anyway.”

Tips for Bidding on Branded PPC

Tip #1: Incremental revenue required

Every paid search campaign is original. Only you can determine if bidding on branded keywords is worth the investment.

When are the ads not worth the investment? If your traffic from paid and natural search combined stays roughly the same, or is not justifiably increased by the amount you’re spending on the branded ads, they’re not a good idea.

When is bidding on branded terms worth it? If you observe an incremental increase in traffic from your paid and natural search combined, bid away.

Tip #2: Monitor the competition

Get a look at the landscape first if you’re considering bidding on your branded keywords. Research your branded searches to find out who is advertising on them and where they’re driving traffic. This can help guide your decision.

Also, keep an eye on your branded campaigns once they’re running.

“Never take your hand off the wheel when it comes to bidding on your brand name,” Lurie says. “Don’t just build a campaign, bid on your brand name and then look at it a year later. You need to keep an eye on who else is bidding and why, because that can be a valuable warning about affiliates who aren’t behaving themselves or competitors who are taking a new tactic and trying to win customers away from you.”

Tip #3: Don’t forget misspellings and customer language

People talk about your company in their own language, which can deviate from your language. If you’re bidding on branded keywords, be sure to investigate common misspellings and spacing differences, such as “MarketingSherpa” and “Marketing Sherpa.”

Also, check out the online social networks that your customers use to find the different ways they refer to your brand.

“If huge fans, customers that really like you, start coming up with different phrases and terms around you, you want to know if those phrases or terms cross over from being descriptions to being additional kinds of brands,” Lurie says.

Tip #4: Isolate branded terms in an ad group

Your branded terms will likely have a good-quality score, so Lurie suggests giving them their own ad group. He also suggests having a separate ad group for the terms in broad match, phrase match, and exact match – even though there will be some overlap.

“Generally, you’re going to get a super-high clickthrough rate on exact match, a slightly lower clickthrough rate on phrase match, and a much lower clickthrough rate on broad match…Phrase match is probably going to be your real money ad group. Your exact match will get a super-high clickthrough, but not as many clicks.”

“We usually like to try to group stuff that’s going to have a high-quality CTR together, because then you get a higher-quality score and your bid cost is going to go way, way down.”

Useful links related to this article:

MarketingSherpa 2009 Search Marketing Benchmark Guide

The Rimm-Kaufman Group

Portent Interactive


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