Beating Big Brands at Search Engine Marketing

Branded search result listings get higher click-throughs than unbranded ones. Is this “brand effect” the primary advantage brands and branded URLs have in the online search space — or is there more to it?

In the mid-1990s, the Internet was to be a great equalizer. Finally, small and midsize businesses could have a Web presence on par with the Fortune 500 companies. When many online endeavors imploded, that equality seemed hopeless. Then, search engine marketing appeared to level the playing field again. Any marketer wanting a listing for an appropriate keyword had only to buy clicks resulting from a paid listing.

Now, the market is apparently again shifting to favor established, deep-pocketed brands, particularly in certain sectors.

Organic search algorithms favor, on average, bigger brands because they tend to favor sites with links from trusted sources. Larger sites, with proportionately larger on- and offline marketing budgets, end up with more visibility and media coverage. These drive link popularity and enhance positions in organic results.

Click-through pricing is driven by limited inventory. In search, one fact is immutable: There’s limited inventory for every term. The result of heady competition for traffic? Let’s look at the landscape to help us answer the question. Portals “own” the traffic. They want to strike the perfect balance between maximizing revenue and good user experience that brings searchers back.

Take Google. A single-minded focus on organic result quality drives searcher loyalty. That same quality helps close major syndication deals. Google’s AdWords is designed in such a way searchers essentially vote for the better (more enticing) ads. Ad results are rotated and tested. Ads that deliver the highest CTR and greatest income (effective CPM) are rotated to the top more often. Searchers’ votes count heavily in position and traffic levels for a given ad.

At Overture, the other powerhouse search ad vehicle, the highest CPC wins the higher position and greater traffic volume, excepting listings removed when the click index is too low. Overture reserves the right to remove listings that don’t receive high CTRs, indicating low interest in those listings. That means lower revenues for Overture and portals using its results.

Brand names in titles and descriptions generate higher CTRs than generic listings. Similarly, branded Web site URLs have an advantage in listings copy. This gives brands a leg up in the competition for position and traffic. A marketer with brand names in her inventory can capitalize on the brand effect in her listings when advertising branded products or items, leveling the playing field again.

Marketer Differences

Two advertisers competing for the same keyword in the auction-style marketplaces should make decisions based on metrics and objectives. If we look at post-click conversion to sale, perhaps the brand name site (with a seasoned design team) created a more user-friendly experience and a smoother checkout process. If a brand name site has a better conversion rate than a nonbranded competitor’s, it can be more aggressive in its search campaign. Even if conversion rates are equal, the brand name site has other advantages when fighting for limited search inventory:

• Better ability to cross-sell, upsell, or remarket to existing customers. A higher immediate value and lifetime value gives a marketer ammunition to justify higher prices for inbound traffic.
• A larger branded site may have the ability to charge less or have a greater margin at the same price. Again, this justifies greater allowable cost per order (CPO).
• Deeper pockets outlast bidding competition for keywords that break even or even lose money.

Between the advantage of listing brands and branded URLs and the economic advantages of being a larger, branded site, smaller sites seemingly have little chance.

Yet many benefits larger sites have can be used against them. Larger sites have higher overhead. They don’t have the emotional investment an entrepreneurial venture does. Marketing managers at small to midsize sites have ammunition:

• Make certain conversion on your site is as large as possible. Don’t waste marketing dollars on traffic that could convert but doesn’t.
• Trade volume for profitability. A bigger marketer can outspend on a CPC for a certain set of phrases or a particular venue. Seek untapped keywords or venues where competition may not be as fierce. Losing money on a listing out of pride is not a solution. Manage by CPO. Take lower-volume traffic at a higher profit margin.
• A buyer segment may prefer smaller vendors with a higher service level. Identify these buyers through listings and on your site. Give your site a service personality.
• Start a dialogue with visitors who are not yet buyers. Design your site to convert visitors to a newsletter, special offer, or tips bulletin. Maybe their first visit to your site isn’t yet the time to buy…

Smaller entities should make use of traffic sources that are not purchased auction style: paid directory inclusion (LookSmart); per-URL paid inclusion (annual or semiannual fees at Inktomi, AltaVista, FAST, and Teoma); and XML-paid inclusion, in which CPC is fixed. Those sources that are CPC and can be measured and controlled should be.

The underdog can win. Work harder and smarter than the megastores. It’s true in retail and true in search engine marketing. Sites that combine hard work and intelligent decision making are the ones that succeed, now and long term.

Whether you are a marketing director at a big-branded site or at a small to midsize operation, the strategic and tactical decisions you make will be a large predictor of your search engine marketing success. Will the branded sites win? Time will tell.