I was sitting here doing reports for my clients and with one of them we decided to do a little experiment this past month. When I set up an AdWords or AdCenter account, one of the campaigns I create is a “Branded” campaign. As you might expect, this campaign contains an Adgroup that focuses exclusively on the company’s name, variations of the company name, and the URL.
There is a lot of controversy in the PPC space about bidding on your own brand/company name. The sound argument is that if a person types in your URL or your company name into Google’s (or some other search engine’s) search box, that your company will, 99.9% of the time, come up in the first 1-3 organic listings, and that you are wasting money by having someone click on a paid ad, because if the ad weren’t there, they’d have clicked on the free organic listing instead.
In some cases, this is true. In some, it is not. I have read many articles and studies that argue one way or another pretty convincingly. In the end, the proof is in the numbers in Analytics. I wanted to share some results here with you and hope that these observations will be helpful.
In January 2012, I ran Company X’s Branded and Product-driven campaigns. When I calculated ROI on both, I noticed that the Branded campaign, though very profitable, had cost the client almost $250 in clicks when they were getting nearly double the revenue at no cost for “branded” organic search queries. This caused me to raise an eyebrow and I recommended to the company that we put the branded campaign on pause in February to see what would happen.
A lot of internet marketers will use the “Branded” campaign to overcompensate for poorer performance on the product side. Branded terms convert at a much, much higher rate at a much, much lower cost than product-driven terms, and so the two of them together can produce a fairly healthy CTR and ROI, but the Branded is clearly providing life support to the Product side. While I generally do advocate running a branded campaign to increase sales and profitability, I never condone that strategy to “cover up and hide” a poorly run product campaign.
In February 2012, we turned off the Branded campaign. I just ran the numbers. A few of the other clients I work with have a fairly well established “brand” in the marketplace – so I looked at their branded campaigns and calculcated the percent of traffic and sales they provide compared to total paid site traffic and revenue. For the average of the 3 companies I looked at the Branded AdWords campaign accounted for about 28% of total AdWords traffic to the site and represented about 65% of total revenue generated by AdWords. The hypothesis, then, is that if we turn off the paid ads for branded terms, searches for those terms instead will result in an increase in visits and revenue for branded organic search click-throughs equal to the decrease created by shutting the branded campaign off.
So, for branded organic terms in February, I was looking for an increase of near 28% in visits and a similar increase in organic revenue over the previous month.
The numbers yielded at 26% increase in branded organic traffic, the number of branded organic transactions increased by 101% and the revenue of branded organic terms increased 102%. Now, the latter two metrics are also compounded by an increase in seasonal visitation and revenue generation on the site. This was fascinating to me.
Now, keep in mind that this scenario is not true across the board. I have quite a few other clients where the Branded campaign produces great revenue at very low cost while their product campaigns operate profitably as well.
Every company I work with produces a catalog with their name on it, sends out emails with their name on it, sends postcards or other direct mail pieces with their name on it, might pay for radio or tv spots to advertise their company, and almost all of them buy ad space in magazines to highlight their company and brand. The statement that paying for advertising to give visibility to the company and brand name is a waste of money is ridiculous and unfounded. Companies do it every day. In every case, running a branded campaign outperforms product campaigns 3::1, 4::1 or even 5::1. It is ALWAYS very profitable. But, just because it is profitable it doesn’t mean it a good thing to do in certain circumstances. Circumstances such as, in this presentation, where we found that indeed, due to low competition, most of those branded sales converted organically. In this case, why would you pay for something that you would get for free otherwise?
So I though about what makes this one client so unique in this from all others that I work with. And the answer, I beieve, lies in the fact that within the U.S., they serve a fairly niche market and they do not have many other competitors in the U.S. for what they sell. When you search for their products or name, they nearly dominate all the search results. So it makes sense that if you remove the branded paid ads, and are left with free organic listings, and there is relatively little to no competition “above the fold”, the majority of those paid sales (85% in this case) converted to organic sales instead for that company. If there were other competitors in the visual results space, the loss to gain would not nearly be so high at it was in this case.
I still maintain the position that running a “Branded” PPC campaign is a worthy investment for a company. But it is always smart to test whether its worth paying for those clicks over the long run.
Just as with anything else though, you can never assume that something is either one way or another. PPC is not so black and white and looking at the actual data is always the way to go. Let the data help guide your marketing decisions. Don’t just jump on a bandwagon of blind belief.