Your Brand: To Bid or Not to Bid?

To bid or not to bid – that is the question for search advertisers, especially when it comes to brand terms. It’s a debate advertisers typically stand on one side of or the other, and it can be a particularly vexing issue. Like most of life’s tough questions, the answer is not as black-and-white as some would have you believe. Bing Ads researchers studied the question, and based on billions of impressions over three months, we now know that bidding on your own brand terms can be an effective strategy – as long as you know when to implement it. The study helped answer three questions: (1) By bidding on brand terms, are you getting more clicks, or just substituting organic traffic? (2) If you are getting more clicks, to what extent are you cannibalizing organic clicks? (3) What is the impact on competitors’ traffic if you bid or don’t bid on brand terms?

Brand Ads = More Clicks

Over a three-month period, we tracked click rates (number of clicks divided by number of searches) of three close competitors in the financial industry – all selling similar products. And, not surprisingly, when those competitors bid on their own brand terms, they achieved a higher overall click rate.

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The companies that bid on their own terms achieved significant incremental clicks – clicks they wouldn’t have received organically. In fact, their investment paid off to the tune of nearly one-third more clicks. Perhaps more surprisingly, most of the organic clicks remained free, and most of the paid clicks were incremental.

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Defending Your Turf

For many advertisers – especially those in highly competitive verticals – playing defense is reason enough to bid on brand terms. “Conquesting” – or buying a competitor’s brand terms – is a strategy that can pay off for some advertisers. In the super-competitive tax vertical, for example, conquesting is fully accepted and practiced by all major industry players. But based on Bing Ads’ data, companies that bought their brand terms executed an impressive defensive play – reducing competitors’ share of their clicks from 24 percent to 7 percent. And when one-upping your competition is the goal, every point of advantage helps.

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All Brand Terms Are Not Created Equal

We know that advertisers benefit when they invest in their own brand terms, but how much they benefit varies by type of search query. We can think about search terms on a scale from the most “navigational” (for example “facebook.com,” “ebay.com”), where users are looking for a specific destination, to more general “search intent” searches, where a specific brand is top of mind (for example “Xerox,” “Victoria’s Secret”), but a user may really be looking for a product type or category. In the former case, competitors get few clicks no matter if the brand owner advertises or not. In the latter case, competitors can potentially capture a huge proportion of another advertiser’s brand clicks. But for most advertisers, even navigational searches can send some potential customers to your competitors, and many brands should consider investing in these brand terms as well, especially if the lifetime value of a customer is high.

In the below chart (showing normalized click rates), a navigational query like “Facebook” generates few clicks for competitors regardless of a brand owners ads. The brand term “AT&T Wireless” leans more toward the “navigational” side of the spectrum than “AT&T,” meaning that most people searching for the former are looking to log into their wireless account, while many people searching for the latter are looking to sign up for a service or make a purchase. And if the brand owner is not advertising in this case, they lose more than half the total clicks, and competitors capture more than one-third of total clicks. The more extreme example is “Victoria’s Secret,” where the brand owner loses almost two-thirds of their clicks if they do not advertise, and competitors capture more than half the total clicks on the page.

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What’s Your Brand Term Profile?

Deciding whether or not you should bid on your own brand terms depends a lot on what type of business you’re in:

Are you unique or generic? In a competitive business, taking control of your brand (and preventing your competitors from getting your hard-earned traffic) is critical. If you’re a major telecommunications provider like AT&T, for example, we’d suggest you bid on everything, even “AT&T login,” to protect your territory.

Are you a subscription type service, or is your business transactional? If your business relies on constant discovery by new customers, brand terms help ensure that you’ll capture a steady stream of prospects. If your business has a large volume of customers who are already locked in to your service, your risk by not bidding is lower.

Evaluate the query intent. Is the user intent navigational? Sometimes, modifiers such as “.com,” “login,” and “my account” can indicate navigational intent.

What is your customer lifetime value? If it is medium to high, it is usually worthwhile bidding even for navigational terms in a competitive market.

It’s Your Brand, Invest Wisely

Ultimately, your decision to bid on brand terms depends on a lot of factors – not the least of which is budget. But if you’re armed with the facts, you can employ this strategy when and where it counts to ensure that you’re capturing all of the hearts and minds – and clicks – you need to be successful.

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