Should You Bid All Brand Keywords To The First Position?

A common way of managing a brand in paid search results is to bid all brand terms to the first position. While this strategy may seem correct from a brand management standpoint, it misses out on many of the nuances of search engine marketing(SEM). For one, many brand campaigns contain over a 1,000 brand variations, of which over 500 may get clicked on in a given month. When a query is typed, these keywords compete among themselves for the impression.

Consider a brand called 123loans. A searcher may enter the brand query “123loanz.” Your campaign contains the following keywords:

Given the CTR of 123loans, its very likely that 123loanz is mapped by the search engine. The end result is an impression sucking effect from the lower bid keyword to the higher one and the net result is a higher cost per click (CPC).

My point is that brand keywords should also be optimized based on return on investment (ROI) considerations.

We looked at some of our clients for whom we managed a large number of brand keywords and the CPC and discovered the position distributions were quite telling. First, the number of variations of broad matches in each campaign was far more than exact or phrase matches. Next, more than 50% of broad matches were below average position of 1.5. In contrast, for exact matched keywords almost all were bid to the first position in search results for optimal performance.

Next, we looked at CPC distribution, using a special visualization tool called a volcano chart. The “mountains” represent the distribution of CPC by keyword, with each mountain representing a match type. Each red square represents a keyword and these have been plotted by CPC. For broad matches, the peak of the mountain is close to $0.2, indicating that the mean CPC is about 20 cents. But look at the variations. It peaks at $1 or more. One might argue that the positions for broad matches are all the way from position 1 to 7, so a variation in CPC is to be expected. However, if we look at the exact matched keywords, most of them are being bid to position 1. Although the mean is 10 cents, the range is from 1 cent to 40 cents.

From a statistical standpoint, these keywords will exhibit heterogeneous behavior, meaning they will not behave the same way, deliver the same performance or have identical ROI potential. If that’s the case, why should they all be treated the same way from a bidding standpoint?

The key takeaway from this is that you should look at the performance of your brand keywords just like non-branded ones, and even if you want them all to be at position 1, you should do so by bidding smartly. In the absence of sophisticated bidding technology, a good rule of thumb would be to leave the exact matches at position 1 but to also treat broad matched brand terms just like a regular non-branded keywords. Bidding all brand keywords to position 1 is at best inefficient and at worst foolhardy.