Don't Let the Competition Steal Your Revenue. Bid On Your Brand Terms!
August 6, 2015
“Why would I bid on my own brand terms? We will receive that traffic organically anyways.” We all have heard this argument many times as account managers. “You just want the credit for the revenue coming in on these brand terms, and that is why the recommendation is made to bid on them, right?”
As paid search managers, we do not tell you to bid on brand terms to inflate revenue numbers. I have the perfect statistically-backed story to show why you need to be bidding on brand terms, and that the revenue coming in for these keywords is not guaranteed revenue for your company without the paid search efforts.
Let’s start with a competitive analysis on a keyword comparing May data to June data:
This analysis is for the keyword “competitor1” meaning it was conducted on one of our competitors terms. Why did we run this analysis on just one competitor term? Our revenue from this keyword in May was around $3,000 on 740 clicks. In July? We received just 2 clicks and no revenue. What happened? Competitor 1 started bidding on their brand terms. In May, we were able to afford to drive the market on this keyword without competitor 1 in the auction. The algorithms of the larger company (more than likely to stay on top of the page) such as amazon.com and target.com were following our bids, and we had complete control of the market and could afford it.
In July, competitor 1 entered the auction. This drastically drove up the CPCs for the keyword, as competition has to bid much higher than the company with the brand name in order to keep up. Amazon.com and target.com appeared to keep up with competitor 1 and began to follow them as they now drove the market for pricing on this keyword. But this shows when bidding on your brand terms, you even get to drive the market against the Amazons and Targets of the world and hurt their ROAS numbers on your terms, and how fun is that to get to drive the market against the big dogs in the ecommerce world?
Our CPCs in May were around $1.06, and in June they drove up to $1.32 on the two clicks that were received. The majority of the time we dropped out of the auction as our bidding strategies kept us out due to our ROAS goals along with the average order value and conversion rates on this keyword did not allow us to stay competitive. We had to dig into other areas of the account to make up for this revenue drop.
Other competitors that maybe have a lower ROAS goal, higher average order values, or are focused more on brand awareness type of advertising did try to keep up. In doing so, we dropped down further in the auction as we were unwilling to chase revenue if it did not fit within our ROAS goal. However, we do know that all of the competition was hurt by this simple move by competitor 1 to begin bidding on their own brand terms. We essentially were able to steal $3,000 in revenue on their terms before they entered the auction.
“But my account is lead generation, so this does not concern me.”
This can be the same situation for you, only your competitors are stealing your leads. Keep your name on top of search results when a user is looking for your brand. You need to be driving the market on your own terms or else the competition will take advantage. Once you begin driving the market your direct competitors may be leaving the auctions because of the costs you are incurring and the higher quality scores you are receiving.
This type of information and study is the exact kind of data you need to be sharing with your clients. A lot of questions are asked about bidding on brand terms, and we can talk how it is best practice, but finding situations like this where the data backs the claim is huge in showing what can happen when you do not bid on your brand terms.
At the end of the day, you’ve been told it is smart to bid on your brand terms because it is low risk, high reward. Well, now you have the numbers to back that claim up. Make the easy decision. Bid on your brand terms.
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