The majority of retailers dedicate a portion of their paid search budget to brand terms thanks to their ability to generate more traffic at a lower cost when compared with non-brand terms. Historically they have also provided an affordable way to hold the top ad position. When Google introduced Enhanced Sitelinks in 2012, this top ad position grew to take up as much as the entire top half of the screen. That meant savvy brand marketers could earn SERP Real Estate dominance with above the fold results controlled by PPC and below the fold results left to natural brand related SEO.
Unfortunately for retailers today, these high performing ads aren’t coming at the same bargain price. While cost per clicks (CPCs) have been steadily growing YoY, Brand terms have been experiencing a much sharper rise in CPC growth, as you can see in the chart below reported in Search Engine Land this past July.
Chart from Search Engine Land, AdWords Brand CPCs Rising? Here’s Why And What You Can Do About It, July 23, 2015
The most recent spike we saw was this past April. During this time Adlucent measured an unprecedented CPC spike with an average increase of 33% across all clients. Brand term CPCs shot up anywhere from 14% to 131% since the beginning of 2015 when compared to 2014. And we weren’t the only ones to experience this change; Search Engine Land reported an increase of nearly 40% YoY in a recent column, and ChannelAdvisor mentioned YoY Brand CPC increases ranging between 65% and 226%. The superb efficiency of Brand terms appear to have lost some of their luster.
What was the cause? It no longer appears to be a simple function of Google’s determined quality score and a keyword’s bid competition. Could it be purely due to Google raising minimum CPCs? Perhaps they’ve also added Advertiser Demand, or even Wall Street demand to the algorithm. We can continue to speculate, but it’s not going to help you control your costs. Do you know what will? A little something I call “Brand-Fu”, the art of defending your valuable Brand terms. We have mapped out steps you can take to maintain as much control of your Brand term costs as possible.
Keep an eye on competitors
You can start with a simple Auction insights report on your Brand campaigns. This will give you a good grasp of your brand’s impression share. Ideally it’s better than 50% and closer to 100%. Do you see some competitor names that you recognize? Do you see any of their ads when you do a Google search? Sometimes finding them can be trickier than it sounds. You could simply Google a handful of your Brand terms and see what other paid ads pop up however, it won’t necessarily tell you the whole story. Clever advertisers don’t like to show their hand and often employ geolocation exclusions or Google’s “exclude IP addresses” feature against competitors. It only requires them to modify the applicable campaign settings and when these exclusions are in place, a search from your office or your agency’s office may reveal that you’ve got no competitors at all! Don’t believe it. If you’re selling anything of value, you’ve got competitors.
Make the invisible, visible once again. There are a couple of tools, like proxies and VPNs, that you can put to use that may completely change what is revealed on your search engine results page. To get around the geo and IP blocks you need Google to ignore your location. I recommend that you use Google’s Ad Preview tool, just be sure to change your location to something a little more general, like “United States”. Did the number of paid ads change? Take a look at each of them. They may fall into one of the following three categories: The Hijacker / Advertiser Impersonator, The Competitor capitalizing on your brand name, and The Reseller who sells products with your brand name. If so, that’s not a bad thing. This is where our brand defense training comes in handy.
Challenger 1: The Hijacker & The Competitor
The Hijackers are an exceptionally naughty bunch; trying to “knock out” your paid search ads and replace it with their own and the real problem here is not only are they stealing your impressions, they are doing it by using YOUR URL! Like The Highlander, there can only be one paid search advertiser per display URL and if a competitor or affiliate is using your URL as their display URL you’ll notice it as an unusual dip in impressions and when your high traffic Brand terms are involved, you’ll see it in your revenue numbers.
There are a few classes of “Hijacker” you may encounter. Affiliate Hijackers, Quality Score Hijackers, and Phishing Scam Hijackers are among the most well-known and infamous.
So, how do you handle them? Much the same way you would handle The Competitor. First of all, according to their policy, Google can normally restrict the use of a trademark within ad text. To start with, make sure that your brand name and related terms, are in fact trademarked. If it is not, have that done immediately.
If a competitor is using your trademarked terms in a competitive way to sell competing products, file a complaint with Google for them to investigate, after you’ve read the AdWords Trademark Policy, of course.
If you’re not on speaking terms with said competitor, consider having your attorney send them a cease and desist letter. Normally this is enough to make them stop, so the scare tactic may be all you need. If not, discuss further legal actions with your company’s attorney.
The circumstances where Google cannot block the use of your trademarked name is if: 1) it is being used by a reseller and the ad’s landing page is primarily dedicated to selling (or clearly facilitating the sale of) the goods, parts or services corresponding to a trademark term 2) the landing page is primarily focused on ways to purchase the trademarked product or service OR displays commercial information about the product or service.
This means if you sell products through resellers or affiliates and those products share your brand name, website name, logo or slogan, there’s not much you can do to prevent others from bidding on your brand terms or using them in any visible ad copy. Contractually you may be able to lay out an agreement that states that affiliate may sell your product but may not utilize your brand name in advertising copy, and if you can get away with it, may not bid on your brand terms for search engine marketing purposes.
Challenger 2: The Well Intentioned Reseller
Our goal here is to keep people from bidding on your Brand terms. Again, we can’t control Google’s minimum bid, but we can try to keep the competition from driving up our CPCs and reducing our impressions. We’ve done battle with Hijackers and defended the honor of our trademarked brand words, keeping them out of competitor’s ad copy. So, what if you catch a friendly site showing your trademarked terms in their ad copy or bidding on your brand terms? You don’t have much recourse from Google in this case, especially when the friendly competitor is a retailer who carries a product where brand name, website name, logo, or slogan is also part of the product name. In this case you need calculation and negotiation.
If a friendly reseller wants to display your trademarked terms or bid on your Brand terms, draft an agreement that is amicable to both parties. You can ask that they not under cut your pricing. I’ve seen cases where newer resellers will carry a well-established competitor’s products just so they can capitalize on their brand traffic. It was impacting impression share but wouldn’t have been a big deal if they weren’t also consistently pricing their products 15%-25% less expensive than the brand owner.
This is where you put calculation to work. Here’s a “friendly” reseller who refuses to play by the rules. Ask yourself, what is their monthly spend to stock my products? Does the revenue you make from that partnership outweigh the impact on your lost impression share and your increased CPCs? Is it worth the impact on your PLA campaigns when this reseller destroys your pricing? Is it worth the competitive impact when a newbie brand is gaining strength off of your tried and true brand name and brand search terms? It’s not an easy question, but it’s worth asking and it can help you with negotiations.
Challenger 3: Yourself
Now you must face the enemy within. What could you be doing that is impacting the effectiveness of your Brand terms. Are you constantly sharpening your Quality Score? Making sure to take advantage of all applicable extensions? This may not theoretically affect Quality Score or lower your CPC, but it will help you cut through competition. Have you zeroed in on your optimal bid? When CPCs seem high, turn them around. Try, gently, lowering your Brand term bids until you drop a position then slowly bid it back up as necessary. It takes a bit more strategy than simply dropping your bids. If you test dropping them slowly while keeping an eye on your impression share you’ll find that optimal bid change. In my experience, it helps to “reset” Google’s expectations sometimes because Ad Rank and thresholds are recomputed on every page. Ads can sometimes appear in a top spot on one page and then again in a side spot on the following page. You may find that you can easily move back into position one without impacting revenue too much but making significant reductions to your CPCs.
If the winds of change blow through AdWords again soon, we can only hope that it’s to normalize 2015’s Brand term CPC spike and bring it down to something a little easier to explain. While this article was written specifically with Google AdWords in mind, many of these tips will apply to Bing as well.
Please let us know if you have seen any increases on your brand CPCs as well! In the meantime we’ll be preparing a follow up with some more specific, strategic and tactical methods for controlling CPCs.