• 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.