Brand Keyword Bidding

Brand keyword bidding is big business and it’s becoming bigger. For anyone in the internet marketing industry it’s crucial to watch this trend and esp the decisions Google is making around it.

 

Within the affiliate industry brand bidding initially was a quick way to make a buck. In 2003-2005 affiliate managers were often slow to realize affiliates were making money for essentially no work. Even now many affiliates use a combination of geo-targeting and day parting to work around affiliate managers and get away with brand bidding.

       

As that loop hole was closed and brands took their brand name bidding in house worldwide and affiliate networks policed out the majority of the affiliates doing brand bidding Google made two changes which made brand names far less lucrative for them in many countries (esp. the UK). Google stopped allowing multiple ads for one website to appear on the same search result (i.e. no longer 10 eBay ads to a page) and Google also allowed companies to claim their brand so that no one else could bid on it (in the UK). On April 4th Google changed this second policy and that angered a lot of brand owners in the UK who are prepared to sue others have promised not to bid on competitors brands. The most interesting article I saw about this was from Hitwise’s Robin Goad. According to Hitwise in the US (where this has always been the policy) only 84% of branded search make it to the brand owner’s website, in the UK before this change 92% did and Robin just followed up showing that the change in the UK is having the expected effect.

 

Two things make this policy change an excellent way for Google to make money:

 

   
1. Branded search made up 76% of searches in the UK in 2007 according to some studies. Simply look at the famous lycos 50 to back this up or numerous studies showing either eBay or Facebook is the most searched for term online.
   
2. Having only one person bidding on their own brand can result in their bid being as low as $0.01 (esp. because their CTR is usually very high) just adding another person into the auction can push that up tremendously giving a huge boost in Google revenue from companies who can’t afford to not buy their keyword.

 

I can’t really decide what to think about the way Google is acting here. Would it be fair for companies who sell NorthFace clothing not to be able to bid on the word NorthFace? On the other hand is it fair that Google essentially extorts brands to spend in some cases $100k’s a week to simply ensure that someone who was looking for them comes to their site? There’s a tonne more depth to this, for example no one is appearing on a search for Facebook, presumably because that is purely navigational and no one clicks on a non Facebook paid link whereas NorthFace has 10 pages of ads. Google’s decision seems to say you need to sink or swim on your marketing ability and brand strength. Make your brand strong enough that people simply don’t think about clicking onto another site.

 

This little post is just a thought starter BUT as an internet marketer it is crucial you have to have a branded search strategy covering both SEO and SEM. Google won’t let you get away without it.

Comments

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[Will]

Great post, Alex. It's certainly a tough one. As you know from our chat when you were in London, there's one rather large player in the flowers market that's fired off legal letters to all and sundry, including us. We'll have to see what happens. But I think you're right...the biggest winner is the goog on this one..