Brand Advertiser and Search in 2011

In 2009, China’s Internet ad growth rate was 22 percent while brand advertisers’ Internet growth rate was only 6.2 percent. In 2010, 80 percent of total search revenue on major search engines such as Google and Baidu were being generated by small and medium businesses. And only 20 percent were from brand advertisers. We believe it will no longer be the same in 2011. We expect to see two revolutionary changes in search for brand advertisers.

Brand Protection Investment in Search Will Increase Sharply

A brand can be an intangible asset. It owns power derived from the goodwill and name recognition it has earned over time. A good brand value can translate into higher sales volume and higher profit margins against competing brands. In the past, many brand advertisers have invested heavily offline to protect their brand equity, but they tend to spend much less online for the same purpose.

In 2010, we did an analysis on a random list of 20 multinational brands’ spending breakdowns and we found that digital spending of these brands accounts for less than 5 percent of their total media spending, let alone search spending.

A brand’s equity and reputation carries as much value online as it does offline. With the ease of creating new websites, posting in blogs and forums as well as serious lack of standardised trademark policy and huge difficulties in online policy implementation, the Internet makes it extremely easy to defame a brand and damage a brand’s reputation.

There are many examples of fake and unauthorised brand images online:

In late 2010, we have worked closely with several brand advertisers on search investment for the purpose of brand protection on search engines. With positive impact on brand value protection and revenue generation, our clients increased their search spending at a rapid growth rate of 400 to 700 percent.

Baidu brandzone is our brand clients’ favourite search ad product. Our clients employ the Baidu brandzone that covers a large portion of the first search result page. In addition, in the paid search ad section under the brandzone, we also ensure our clients’ keyword text ads with their brand names and flagship product names are ranked in top positions. By doing so, we successfully provide users with positive experiences and lead them to where our clients want them to be, which are official corporate and product websites and in some cases, clients’ e-commerce sites to ensure positive brand protection. In addition, we helped our clients register their trademarks on major search engines in order to prevent a wide range of brand abuse from unauthorised channels, counterfeit, pirated sales, false association, competitor attacks, and other online threats to our clients’ brand reputation.

In 2011, we expect to see more and more brand advertisers start to understand the importance of brand protection in search marketing. With this trend, we will be seeing major search engines in China enforce their trademark policy standardisation and implementation.

Revolutionary Change in Search Ad Effectiveness Measurement

In the past, typical KPIs for search advertisers were clicks, click-through rate, conversions, cost per click, cost per action, return on search investment, etc. In addition, many search advertisers evaluated their search ad campaign effectiveness based upon their previous campaign performance. They might compare their own campaigns’ performance vs. their competitors or compare their CTRs and CPCs against industry average CTRs. They seldom set a KPI using the “share of voice” concept, which has been widely used in traditional media.

With more and more brand advertisers coming to compete in the search battlefield, we expect to see new concepts will be employed to measure search advertising effect for brand advertisers. Brand advertisers will introduce new KPIs such as click share and impression share.

The concept of click share and impression share are built upon traditional media’s ‘share of voice’. In search marketing, impression share becomes more important for brand advertisers because typically on the first search result page, there are only eight paid search text ads plus up to three search ads on top of the organic search result. For example, for generic keywords such as anti-dandruff shampoo, all shampoo brands may need to compete against each other in order for their ads to be shown on any of these 11 positions. When brand awareness matters more than sales and ROI especially for consumer package goods brands, how to strategically occupy these 11 ad positions will be critical to win in search.

Similarly, click share is built upon the concept of owning a certain percentage of total clicks for the same keyword in the industry. This works effectively, especially for market leaders. If a shampoo brand’s market share is 20 percent in China, it will be a strategic question that whether it needs to own 20 percent of total clicks for its golden keywords on key search engines.

We are excited about these two potential changes because we strongly believe it is important for brand advertisers to realise the importance of brand protection in search marketing and to go beyond limited search measurements of CPC, CTR, and CPA. We trust these two changes will positively transform the search industry, bring new learning to search professionals, and make search an even more uniquely dynamic marketing tool.