Paid Search: The Bright-Line Divide

There are plenty of good reasons to advertise on your brand name.

Advertising on your brand allows you to:

  • Control the message. The text of the message can be kept fresh, highlighting promotions, shipping cut-off dates, whatever makes sense for the brand.
  • Direct traffic. Site-links provide an opportunity for users to navigate to the next page deeper rather than just the home page, thereby aiding conversions.
  • Occupy real estate. Taking up more space on the SERP means less leakage to affiliates and competitors.
  • Capture incremental traffic. In some cases, our research shows that paid search ads on brand names do indeed bring in some incremental traffic. Your mileage will vary, so test this yourself, but in some instances the advertising more than pays for itself without any other considerations.

However, the fact that it is generally wise to advertise on one’s trademark doesn’t change another crucial principal of paid search marketing:

Never, never, never mix the results of brand advertising with competitive non-brand advertising.

All averages lie. Blending the results of brand and non-brand search doesn’t just lie, it will kick you in the teeth and take your lunch money, too.

Mixing the results of brand and non-brand paid search results leads to a false sense of scale and efficiency for the program which in turn creates chronic problems down the line.

The greater the fraction of overall “paid search” sales brand ads represent the greater these problems become.

Problem 1: Lack of Control

The core problem is that the paid search manager has very little control over the volume of traffic, the conversion rates, or even the cost of brand advertising. The paid search manager can and should test and adjust copy for maximum positive effect.

He or she can and should make sure site links and seller ratings are used to full advantage. S/he can and should test landing page versions and messaging to wring the most successful visits out of brand search traffic.

Assuming the good paid search manager has done these basics, they’ve exercised about all the control they have over brand search performance.

Other than guarding against some crazy CPC penalties Sid Shah and we have seen, the ads will serve at the top of the page for most folks at low cpcs and there won’t be any leverage to get more.

Traffic and conversion volume on brand search will rise and fall largely, if not entirely, as a result of offline marketing, brand awareness, friend referrals, and loyal customers navigating to your doorstep; the paid search manager controls none of those factors.

We’ve seen brand sales account for anywhere between almost nothing for internet pure-plays in start up mode, to over 90% of overall sales for very well established brands with huge offline advertising budgets.

Evaluating the performance of a paid search program by looking at overall numbers, when 70 – 90% of the conversions are on your brand, is ludicrous. You end up being praised or scolded based on factors entirely outside of your control.

Competent people want to be evaluated based on what they control, and in search that’s the performance of competitive non-brand keywords.

Problem 2: Disconnect Between Average Efficiency & Incremental efficiency

We’ve long preached the importance of understanding more than just the average ROI of your paid search efforts, but also the incremental efficiency of the last dollar spent.

Predicated on the notion of Diminishing Marginal Returns, smart marketers will always get more ROI from the first dollar of advertising than the last dollar of advertising, because s/he always picks the lowest hanging fruit available.

Understanding the incremental ROI will let you predict what the next chunk of ad spend is likely to generate.

Because of Diminishing Marginal Returns the incremental ROI is always worse than the average ROI — if it isn’t you’re doing something wrong. Our studies of Bid Simulator data find that within competitive non-brand paid search the incremental ROI is usually on the order of 60% – 80% of the average ROI.

Your average non-brand ROI may be 5 to 1, but additional spend over that same period is likely to be at 4 to 1 or 3 to 1, which may be under water for your business.

However, that disconnect pales in comparison to the disconnect between the two when the average includes brand sales.

We see instances where an advertiser sees an “average ROI” (including brand sales) of 8 to 1, where the competitive non-brand average ROI is 1 to 1, and the incremental ROI is significantly worse than that.

The brand may say: “We’re comfortable letting the overall ROI drop to 7 to 1 for now” but oftentimes they don’t seem to realize that they’re feeding money into a shredder at that point.

Let’s think about a 1 to 1 ROI. You spend a dollar in advertising to drive a dollar in sales. It would be just as efficient to have your paid search manager place orders on your website using the marketing budget to pay for it…and then throw the merchandise in the trash can when it arrives!!!

The 1 to 1 ROI may make sense for some folks, and that’s cool. The point isn’t that you shouldn’t spend for branding purposes, just that incorporating brand data hides the likely ROI on the next dollar spent.

Problem 3: Complete Misread Of Online To Offline Spillover

Hugely misleading studies, like this one, suggesting that for every dollar generated online by search ads there are $6, $7, I’ve even seen a claim of $10 in sales generated offline, make people believe that they’re spending money cost effectively when they aren’t. Not one of these studies has made the brand non-brand distinction.

Obviously, plenty of people want to find a store locator, the nearest State Farm Agent, business hours, in-store availability of what they’re looking for, etc. before they hop in their car and drive to the store or business.

They search for the brand they’re about to drive to, and you can bet your last dollar that the ad that shows up after they search for you by name isn’t capturing much incremental traffic.

Problem 4: Pulling The Wrong Levers

Because the misunderstanding of advertising efficiency is SO profound companies compound their problems by taking money out of other offline channels to pour more money into search because it seems so much more efficient.

“We’re getting an 8 to 1 ROI from paid search and only 2 to 1 from catalog prospecting; let’s dump the catalog and put the money into search.”

I’ve seen this happen more than once with budgets for catalogs, infomercials, circulars, TV ads, etc slashed to put more into search.

Sometimes that’s the right call, but often it’s based on the fundamental misunderstanding we’re describing and it leads to a death spiral.

The advertiser presents us with more money to spend in search and says: “we need sales to grow by 50% to cover the loss of the other marketing efforts”, and frequently paid search sales go nowhere or even decline because the advertising that was driving the brand search was cut off.

Problem 5: Inevitable Disappointment

As a result of the first four problems, the advertiser will invariably end up disappointed with their paid search manager or agency at some point.

Frustration comes because incremental advertising spend in search is hugely inefficient and this comes as a surprise for some reason.

Or, overall sales goals aren’t met because brand sales sag unexpectedly and the paid search manager has no way to compensate. Or the reckless spending encouraged by the combined view is a symptom of deeper business problems resulting in a trip through Chapter 11.

Or someone else in the organization — a CFO, a CEO, a new search manager — comes in, pulls apart the numbers and is horrified at the wasteful spending in competitive non-brand search that was previously hidden from view.

We’ve seen all of these scenarios play out, despite the fact that we have always encouraged our clients to evaluate performance strictly by the non-brand numbers.

With few exceptions, when goals are expressed in terms of aggregate brand and non-brand performance frustration is inevitable.

Advertisers end up frustrated with the paid search manager for not controlling that which s/he doesn’t control, and the paid search manager with their bosses for not understanding this fundamental disconnect.

The Charlatans Don’t Help

Unfortunately, many agencies, engines and others who feed on online advertising have a vested interest in blurring the brand, non-brand distinction.

These folks exaggerate the complexity of search funnels, buying cycles, and now attribution across channels and encourage advertisers to look at data more ‘holistically’ and with less granularity. That’s garbage!

Advertisers should look at data more intelligently, not throw up their hands and call it holistic marketing.

Intelligent use of data includes attribution of credit within paid search and across channels — as we do — and may include complex media mix studies to gauge optimal advertising spending levels for each program.

There are many valuable ways to look at aggregated data. Performance by category, subcategory, geography, keyword specificity, landing pages, number of ‘tokens’, and other useful classifications can reveal actionable insights.

However, folding in brand results never aids clarity and only causes confusion. While it may, in the short run, make paid search look better than it is, it will invariably make the paid search manager look bad in the long run.

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

Related Topics: Channel: SEM | Paid Search Column


About The Author: is Co-Founder and Chief Marketing Scientist of RKG, a technology and service leader in paid search, SEO, performance display, social media, and the science of online marketing. He also writes for the RKG Blog. Follow him on Twitter at @georgemichie1.

Connect with the author via: Email | Twitter | Google+


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  • Pat

    Best paid search article i’ve read in many months!

    You left off how cheap Name traffic PPC should be, it’s CPC when done right, reminding me of the early days of PPC. Ahhh, fond memories! The avoidance of diversion does have a reward – shut off the Name traffic for a week, if you’re doing it right, you’ll see it’s value go away. If you’re doing it wrong, you won’t. The only channel with an on/off switch! Actually, it has many such switches.

    “Assuming the good paid search manager has done these basics, they’ve exercised about all the control they have over brand search performance.”
    Very big assumption! Haha! Pardon my cynicism, but have seen too many ‘professional’ managers mess this up very badly. We just revised a new clients Name campaign, taking it from 32x ROAS to 431x, WHILE orders, AOV and total revenue also went up more than 100%.

    Your #4 catalog cut is also something I routinely see manifested in their Name traffic (paid + organic). It’s on the savvy paid search consultants shoulders to convey the value of various types of traffic, including revealing which ones represent the outcome of other channel activities. Ethics + know-how + proper humility = optimized outcome.

    Hallway of execs… paid search, organic, catalog, email, affiliate… not nice when Pat the PPC guy takes credit for Oscar’s work, or Chris’s, or Evelyn’s, or Alberto’s… as the annual exec bonuses are handed out, Mr. Attribution chuckles hardily.

  • George Michie

    Pat, thanks for your comments! I love your recipe: Ethics + know-how + proper humility = optimized outcome. I may have to borrow that one — with proper attribution of course :-)

  • Marisa Fox

    George – Great article that hopefully will encourage clients to analyze agency data more thoroughly, not just accept the high level results. I think the fact that so much is trackable in online marketing makes it easy for clients to think that the data we can track is the whole story when it’s not. But I agree that some marketers take advantage of the “unknown” and make some huge assumptions as to the impact PPC is having beyond the data while not giving proper credit to other channels driving brand search.

    I agree with almost everything you discussed, but I have to add that traffic and conversion volume on brand search is also impacted by non-brand search. Yes, offline and other marketing channels impact it greatly, but the true value of non-brand search is not just those metrics, but also the brand searches the non-brand searches generated over time from those shoppers.

    If done right, increasing your non-brand traffic should increase your non-brand revenue as well as your brand searches and revenue. I know it can be hard to measure since there can be so many things going on at a time that affect brand search, but to only judge performance based on non-brand could stifle your growth unnecessarily.

  • George Michie

    Marisa, thanks so much for your thoughtful commentary. No question that like any other channel, non-brand search and the ‘unsuccessful’ visits create some level of brand awareness that sometimes prompts a later brand search. We started reacting to the multi-touch data within paid search more than 7 years ago when we noticed a high-end well know jewelry client exhibited this pattern to a degree (engagement rings are USUALLY a considered purchase :-)). My argument is to track those multi-touch interactions and parse credit appropriately — across channels as well as within search.

    The point is that brand search and non-brand search should really be regarded as separate channels that certainly do interact with one another, but are nevertheless fundamentally different.

    While there is no question any visit to the site has some branding value that can help down the road, I don’t buy into the notion that the little text ad impressions produce any real branding value. Clicks? sure; but not many folks could name the companies that showed up on the right rail of their last search.

  • jordonmeyer

    Smartest and most insightful PPC article I have read in a long time. This should be read by everyone working in PPC and reporting to anyone in-house, and especially in an agency setting. Clients and business owners need to understand this as well.

    I manage a BIG brand PPC account and the brand return is Huge like many other companies experience. CPC is laughable, but volume is so insanely high that it eats up budget and therefore caps out, constantly. Luckily our marketing execs are smart enough not to dump more funds towards us (PPC) because they understand a good mix. That 30, 40, or 100 ROAS on branded search will dry up if you don’t continue to mix your channels.

    I could go on, but it will begin to sound like a high-school rant on how cool your car is. Nice job putting this together and thanks.

  • George Michie

    Jordon, thanks for your comment. It kills me when I hear big brands say “Well, my brand keywords are my most valuable keywords, of course.” I yell “No, they’re not valuable, these searchers are walking through your front door for a reason unrelated to your search ads (largely). The valuable keywords are the ones that bring you incremental business, the non-brand keywords. The whole game of paid search is played on the non-brand side.

    Sorry to preach to the choir! You get it. Try running this by your CFO — those folks get numbers. S/he will see you as a hero for saving your company millions of dollars.

  • E.W.

    As Webmaster in our country we believe that Search is still the best way but challenging task for everyone. But with this article it give us the opportunity to be on the SERP by applying some ads in the Search Engines.

    This is a good idea especially for those who want immediate result. Thank you for sharing this review.

  • S.G.

    Great article, I read lots of content on PPC marketing for the last month, but this one is winner.
    EW, when you just launched your service, PPC can bring you revenue even when your site is still out of first 10 pages of google or bing. And using both SEO and SEM only makes your overall conversion higher.


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