7 Reasons Why Nixing Branded Keywords Is Not The Fix For CPC Inflation

“If your friend jumped off a bridge, would you do it too?”

While this classic parenting question is cliché, it makes a good point. And it’s one that search marketers could also learn from. Especially those who are thinking about eliminating brand keyword phrases from their paid search campaigns just because their competitors are doing it.

The Role Of CPC Inflation In Retail

Unfortunately, this mindset is common in the retail space where the search landscape grows more complex and crowded every day.

According to a recent SEMPO report, search marketing investment is slated to grow to $19.3 billion dollars this year. That’s an increase of 16% — the largest increase since before the recession.

But with growth comes competition, which leads to bidding wars and CPC inflation. In turn, it makes channels that were once touted for their ability to scale and deliver a profitable ROI, less efficient.

This is especially true for retailers with large, complex accounts with millions of keywords. And inflating CPCs make marketers nervous. In fact, they are likely to cause even the most savvy search marketer to sweat and look for quick fixes.

7 Reasons To Keep Investing In Your Brand Keywords

Let me be clear — shutting off Brand keywords for savings is not the answer! Below are seven reasons why you should rethink moving investment away from your brand keyword phrases.

Brand Protection

Advertisers who do not bid on branded keyword phrases are more vulnerable to competitors seizing this opportunity. The March 3rd changes to Adcenter’s policy regarding trademark keywords just reinforce this point. Any cost savings will be negated if the sales and revenue intended for these terms are picked up by a competitor.

Dynamic Messaging

The fluid nature of paid search allows retailers to update ad messaging in real time, which is tremendously effective during last minute sales and promotions. This also ensures retailers’ ads are most relevant during key holidays and seasons. Paid ads are also great for testing new marketing messages for effectiveness before making a wider investment in other channels.

Value Ads Within PPC

New engine features including sitelinks, location extensions, product extensions, PLAs and Rich ads in Search typically only display on highly relevant keywords with high quality scores, aka your brand keywords. Without them, these opportunities become harder to seize and benefit from.

Missed Goals

You could argue that the cost of brand keywords could be saved by capturing this traffic organically. However, this investment is typically quite small relative to the rest of the program. The revenues they generate, on the other hand, are tremendous. Removal of brand keywords will seriously impact retailers’ ability to hit forecasted goals from this channel. Keep in mind that you won’t just feel the loss in brand revenue; you will also see a loss in non-brand influenced revenue.

Shrinking Efficiencies

Each of us knows that our brand keywords are our bread and butter and allow us to support our testing and expansion plans by floating the traditionally less efficient non-brand keywords and content networks. Removing brand keywords will result in shrinking efficiencies in terms of reported ROAS.

Increased Real Estate

By bidding on your brand keywords, you are taking up more real estate within the search landscape. Studies have shown that while the highest volume of clicks is driven by the first positions in organic search results, the lower positions (3 – 5) still drive significant volume. Before shutting off your brand keywords, you should survey your organic placements to see if you are dominating the landscape above the fold on page one.

Service and Support

Let’s not forget that the dedicated service and support retailers receive from vertical reps at the engines, account reps from tool providers, and the large teams from agencies. They are all widely influenced by the investments that retailers make in their PPC programs. The reality is that removal of brand keywords could potentially lead to a reduction in dedicated support from vendors.

Remember, just because competitors are abandoning their brand terms, doesn’t me you should too. They probably are looking for a quick fix, and haven’t considered the larger implications. Retailers who are thinking about removing branded keywords from their accounts should first weigh the costs versus the benefits. From there, it should be easy to identify reasons why continuing to invest in brand terms is a smart decision.

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: Retail | Search & Retail


About The Author: is Associate Director of Retail at iProspect. As an external strategic consultant for iProspect clients, Diana is responsible for evangelizing and educating client leadership about paid search, providing strategic insights in online marketing, and building strong relationships within their organizations.

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  • Chris G

    When you say “Removing brand keywords will result in shrinking efficiencies in terms of reported ROAS” are you confining your ROAS calculations to just the search marketing budget? I think if ROAS were calculated for all search traffic, *including* organic, then removing brand keywords from the paid search program makes sense. Organic can pick up much of the same traffic, and the money used for brand terms that have a top organic placement can be spent on other search terms.

    Yes those brand terms *seem* inexpensive when you read the CPC stats, but if you calculate how much those clicks really cost, they don’t look inexpensive any more. Generally, with a #1 organic placement, the paid brand terms will bring in a lot of visits that are actually cannibalized from organic. If you figure out how many extra clicks you’re getting above and beyond what you’d be getting anyway from organic, and calculate the cost per extra click, those terms can start to look costly – often double or triple the reported CPC.

    Don’t try to shrink your SEM spending by cutting off brand terms. Keep the budget the same, but figure out the true cost of those “extra” visits and move that money over to the best performing terms that have no organic presence and cost less than the cost per extra click for the brand terms.

    If you calculate ROAS for all search traffic, organic and paid combined, and optimize your spending within the whole search traffic universe, your “bread and butter” might start to look different.

  • http://www.marcusinteractive.com Marcus Interactive

    Interesting points you make. My take on this, however, is why throw away the money just to appear multiple times for the same SERP. Users are now gettign savvy enough to know the organic results from the paid ones, which is a main reason why organic results return 3 times as many clicks as paid ads do. I’m all for PPC, but not with keywords that you are guaranteed the number 1 slot no matter what.

  • http://blog.efrontier.com sidshah

    Chris, Marcus Interactive: There is enough research evidence to point out that you should be bidding on brand keywords. A peer reviewed paper showed that SEM+SEO leads to 4.2 – 6.5 % more profits than having SEM turned off for companies on average. Here is the paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1491315. People keep talking about cannibalization but I haven’t seen one good well designed study that shows a statistically significant cannibalization effect.

    Further you are speaking from a pure short term DR perspective. A lot of retailers have brand considerations to think about. If a large big-box retailer does a big TV buy do you really want your competitor buying the top paid search spots ?

  • http://www.rimmkaufman.com George Michie

    Diane, you raise several good points here, but I have questions about some of the others.

    First, “CPC inflation” is really a bogus concept. It implies that an advertiser’s CPCs are at the mercy of their competitors, which they aren’t. The advertiser/their agency controls the bids, and should bid no more than makes economic sense.

    Second, the notion that overall ROAS is impacted if the low cost, high “revenue” brand keywords are excluded ignores the fact that you should NEVER look at overall ROAS. Brand and non-brand should always be viewed independently with proper credit attribution awarded between them.

    Third, why would support levels fluctuate based on brand keywords? Again, if budgets are based on the false notion that brand ad sales/leads are 100% incremental then the advertiser/agency have a fundamental misunderstanding of the channel and are doing the advertiser a disservice by lumping it all together.

    Fourth, the idea that product extensions and PLAs hang on brand ads mostly is just wrong. They are mostly for the tail.

    Sid, I’ve yet to see a convincing, comprehensive study of the issue (including the one you cite). What is true for one company will not be true for another on this topic. A major brick and mortar retailer that spends the bulk of its advertising budget offline will have much greater levels of cannibalization than an eCommerce pure-play. Different business models, marketing structures, etc will impact this enormously.

    In most instances brand ads create some incremental lift over not having one, but it is grossly inaccurate to suggest that the traffic on brand ads is 100% incremental. Most of it is cannibalized for most advertisers. Still makes economic sense to do it in most cases, and Diane points out other good reasons to do it beyond ROI.

  • http://www.cpcsearch.com Terry Whalen

    George, completely agree with your comments. Great clarity with this:

    “CPC inflation” is really a bogus concept. It implies that an advertiser’s CPCs are at the mercy of their competitors, which they aren’t. The advertiser/their agency controls the bids, and should bid no more than makes economic sense.

    To put forth the argument that not spending on brand terms likley decreases service and support from your agency or search vertical team is so wrong and so silly on many levels.


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