It can be quite tempting to look at the high return on ad spend (ROAS) of a branded search campaign and conclude your company should be spending on branded keywords. After all, if you can earn $10+ in revenue for every $1 of ad spend, why shouldn’t you? Those returns are fantastic!

But if you are a chief marketing officer (CMO), performance marketer, or anyone else tasked with making advertising decisions, whether branded keywords yield a high ROAS (hint: they almost always do) isn’t the right question. Instead, you need to determine if you didn’t advertise on branded keywords, would it matter? Asked differently, do branded search ads generate incremental revenue, or do they cannibalize organic results?

As we’ll see, the answer is fiercely debated. Advocates of the argument that branded search ads generate incremental revenue argue that if you don’t advertise on your brand keywords, someone else will. As a result, you may lose out on revenue you otherwise would have earned to a competitor running paid ads on your brand name to be featured higher in the search result. Search Engine Land has a good breakdown and viewpoint of the decision making process here.

Critics of branded search ads take the counterposition. They argue that if a consumer is searching for your brand, they are by definition already familiar with your brand and therefore must be a qualified prospect or an existing customer. It’s thus likely to assume they’ll scroll past any paid ads to find your company’s organic listing. Therefore, any money spent on brand terms to appear higher on the search engine results page (SERP) is a waste of ad spend and simply cannibalizes organic search results.

Both sides have valid points. A consumer searching for a keyword like “Nike” likely does have a high intent to find Nike products.[1] Yet, it’s also possible that a direct competitor like Adidas can bid on the keyword “Nike,” steal impressions, and possibly win the consumer’s business.[2] So who’s right?

The answer is “it depends.” Ultimately the decision of whether or not to invest in branded search ads is nuanced and should be made based on a brand’s specific circumstances and strategy. As we will unpack below, factors such as competition and brand recognition, among others should all be taken into account when determining the right strategy. For those with enough budget, an A/B test may be a good option to support a decision statistically. And regardless of budget, advertising results for branded and non-branded searches should always be reported separately.

Branded vs non-branded

Branded search advertising involves bidding for keywords that contain your company name, while non-branded search advertising doesn’t. For example, “SabinoDB digital advertising services” is a branded ad while “digital advertising services” is a non-branded ad.

Branded paid search ads (and non-branded) are awarded premium real estate on the SERP. These paid search ads appear above organic search results when users search for keywords, such as the brand's name, and are thus the first thing a user sees. This dynamic is even more apparent on mobile devices where screen sizes are smaller and as a result, a single paid search ad is typically the only thing visible above the fold.

Competition

Companies in competitive industry verticals where other merchants are frequently bidding on their brand should consider adopting a defensive strategy by advertising on their branded keywords. Paraphrasing the technology and media investor and analyst Eric Seufert[3]:

Bidding on your own branded keywords helps reduce the risk of other companies serving ads against search results for your brands. Google ranks ads on their quality which among other factors considers an advertisement’s relevance to the consumer’s intent. Since a consumer searching for your brand is a strong signal that they likely are looking for your brand, it is often cheaper and easier to win the search auction for your brand over a competitor.

Those that don’t protect their brand keywords forgo the opportunity to be featured at the top of the SERP and risk losing out on impression share and clicks to competitors.

By way of example, consider the results of a branded search for “Burton snowboards.”

Burton sells snowboards directly to consumers via its website and wholesale via retailers like REI. By not bidding on its brand keywords, ski and snowboard retailer, Peter Glenn, has earned the top search position on Google (as an aside, Burton does not appear to have Google Shopping campaigns setup either, as REI and Evo.com comprise the top six Google Shopping results).[4]

Brand recognition

It’s possible that a brand is so well-known and or highly differentiated in the minds of consumers that it doesn’t make economic sense to defend your brand from the competition via bidding on branded keywords. This was the position Restoration Hardware took after finding that 22 keywords were driving 98% of their paid search results and those keywords were “Restoration Hardware” and 21 ways to spell “Restoration Hardware” wrong.[5]

We believe this is the exception and not the rule. Restoration Hardware goes to great expenses to invest in brand recognition and awareness through its upscale retail stores and premium print publication. These offline investments in brand marketing establish presence of mind and increase the likelihood that a consumer purchases their product versus a competitor’s the next time an opportunity arises.[6] For companies with less established brands, less differentiated products, or smaller investments in offline brand awareness, spending on branded keyword search ads (including common misspellings of your brand name) to increase their visibility and drive traffic to their website may still be beneficial.

Presentation control

Paid search ads provide an opportunity to customize the presentation of your brand and your message to the customer via the use of headlines, descriptions, and ad extensions (e.g., sitelinks and promotions). In contrast, organic search results are automatically generated by Google crawling and indexing websites, and one has limited control over the presentation.

By way of example, consider the difference in the presentation of a paid and organic search result for the apparel company, Fair Indigo.

Fair Indigo effectively uses each headline, sub-header, and description of its paid branded search ad to convey a carefully crafted message and strong call to action. By comparison, the organic listing for Fair Indigo which is automatically created by Google features disorganized sitelinks and cutoff sentences.

Search result rankings

Presentation is important, but consumers can’t click on your organic search result listing if they can’t find you. It’s estimated that the first position on Google’s SERP captures 70%-90% of all search traffic clicks and that the first five positions receive over 65% of all clicks.[7] Thus when considering whether to invest in branded search ads, it’s first worth evaluating where your brand ranks organically on the SERP for various branded keyword searches and your overall search engine optimization (SEO) strategy. The lower your SERP position ranking, the more likely it is that investing in branded keywords ads is likely the right strategy.

Measurement

Regardless of your stance on the effectiveness of branded search advertising, it’s critical to break out the marketing performance results between branded and non-branded advertising campaigns. Results vary by industry and brand, however, generally speaking, branded search campaigns attract consumers that are familiar with your brand and typically earn a high return, while non-branded search campaigns target more prospective customers which are inherently more expensive to acquire and earn lower returns. Without separating results into branded and non-branded, it’s impossible to understand the true economics of either group. (Note - when measuring ad performance, consider a 3-step ROAS analysis and assessing the lifetime value of the customer relative to customer acquisition cost, or CLV to CAC).

A/B test

Making a decision without data is called guessing. And while breaking out performance into branded and non-branded campaigns is a good best practice, only A/B testing can truly provide a data-driven approach to test whether branded search ads are generating incremental revenue, or cannibalizing organic results.[8] A/B testing would allow you to isolate how much additional revenue is the result of a brand keyword ad campaign versus how much of the campaign revenue would have been expected if you did not run the brand keyword campaign. The drawback to A/B testing is that to get accurate results, tests need to be carefully set up to and marketers need to ensure that their sample sizes are large enough to be statistically significant. This can be time-consuming and expensive in practice.[9]

Summary

At some point, every marketer needs to determine whether branded paid search ads are the right strategy for their company. When making this decision, the key question to ask is “do branded search ads generate incremental revenue, or do they cannibalize organic results?” The answer almost always usually depends on a variety of company and industry vertical specific factors, ranging from competitor behavior to brand recognition. Bidding on your own branded keywords can be a cost-effective defense against competitors’ attempts to steal impression share and clicks. Branded paid search ads also provide an opportunity to customize your brand message in ways that organic listings don’t. On the other hand, companies with well recognized brands with a strong organic search ranking like Restoration Hardware may conclude that running paid branded search ads is a waste of ad spend. Wherever you land on your paid search strategy, we recommend that you always break out branded and non-branded ad performance separately. We also recommend that for those with larger budgets, periodically conducting an A/B test to support your decision statistically. If you’d like help with this decision and process, consider working with an e-commerce Google ads agency.

More From SabinoDB     

• How to increase sales and profits with lookalike audiences

• Breaking down ROAS

• Why unit economics like CAC and CLV Matter

Sources

[1] This example focuses on transactional searches and is oversimplified. There are three main types of search queries: transactional (seeking to purchase), navigational (seeking direction to a physical location or online destination), and informational (seeking knowledge).

[2] https://mobiledevmemo.com/the-game-theory-of-branded-search-advertising/

[3] Ibid.

[4] This example is oversimplified. Burton could very well be bidding on its own brand keywords and still not be featured in the top SERP position. It’s rare that a brand can capture 100% of all available impressions for any keyword. A brand can lose out on impression share because they ran out of budget or they are not bidding enough to win the auction.

[5] https://econsultancy.com/restoration-hardware-bid-on-3-200-keywords-found-98-of-its-ppc-sales-came-from-just-22-brand-terms/

[6] https://mobiledevmemo.com/understanding-the-role-of-brand-marketing-for-digital-products/

[7] https://www.forbes.com/sites/forbesagencycouncil/2017/10/30/the-value-of-search-results-rankings/?sh=1e79231c44d3

[8] https://www.incrmntal.com/are-branded-search-campaigns-incremental-or-not

[9] https://mobiledevmemo.com/the-quality-of-brand-advertising-revenue/

About

SabinoDB is an e-commerce and marketing technology company committed to helping companies use big data, real-time analytics, AI, and machine learning to better understand their customers, improve marketing results, and grow their business. If you are interested in learning about how SabinoDB can help your company, please reach out directly to Ryan Hammon. Email - ryan.hammon@sabinodb.com Phone - (415) 847-8103.