Should I Buy My Brand Terms? Reasons Not to Buy

Quite some time ago (longer than I like to admit) I wrote a blog about the benefits of bidding on your brand terms which can be found here.

In that post (which I recommend reading first), I laid out what I believe to be the main benefits of bidding on your brand terms, and as promised, I will now take you through the reasons why you maybe shouldn’t.

#1 You may be cannibalising your SEM traffic

There is a consensus among many paid search specialists that by bidding on your brand terms you generally see an increase in overall SEM traffic due to your increased retail space in the Search Engine Results Page (SERP) resulting in a higher Click-Through Rate (CTR).

However, if there is no-one bidding on your brand terms and you have good above-the-fold SERP presence organically as shown here…

…it’s a reasonable conclusion to reach that the majority of brand searches would come to your site via your organic listing and any paid ad would mean you are just paying for what would otherwise be free traffic.

#2 Brand clicks are cheap but aren't always what you think

The counter argument, is that as brand clicks are so cheap why wouldn’t you invest budget into brand terms just in case you might be leaking brand traffic to other websites?

With my devil’s advocate hat on, brand clicks may not be as cheap as you think. Let’s suppose for the sake for argument that if you have a paid ad on your brand terms, your SEM traffic does increase and your SEM CTR increases from 80% to 85%. You will naturally see a transfer of traffic in your analytics software from organic to paid (usually a brand term will have a CTR of around 40%), so if we are bidding on our brand terms, the organic CTR can be estimated to be around the 45% mark.

Brand traffic is cheap from paid search, usually around the £0.10 (if no-one is bidding for your terms) however a metric worth considering is not the Cost per Click but the incremental click cost per click. That is, what is the cost per click you are paying for the extra 5% of traffic you are getting?

To spell this out, this is what you are going to see if you rely only on the organic listing:

If you add a paid ad you are going to see this:

You may think, £0.10 per click is not much and I am happy to pay that, but when you look at the fact that you only generated an extra 50 clicks by having your paid ad and these extra 50 clicks cost you £40 you may think again as it makes your incremental click CPC quite high:

The question then becomes, is that cost per click financially viable for you? Which leads me onto...

#3 Opportunity cost

If you (like most companies) have a limited paid search budget the opportunity cost of bidding on brand terms is that you will have less budget to allocate to non-brand terms. Generally speaking, non-brand terms are more likely to drive new visitors to your website so your real opportunity cost of bidding on brand terms, is getting new users to your site.

When you take into account that the incremental clicks from your brand campaign may be costing you £0.80 a click, you may discover that there are actually cheaper relevant non-brand terms to use your budget on, sometimes to the extent that your overall traffic to your site (all channels) will increase by not bidding on brand terms.

Conclusion

I have now gone through some reasons to and reasons not to bid on your brand terms, and the next question is “well reasons should I follow?” The answer is that it will depend, and in my last blog post on the subject I will take you through some methods of how to reach the decision that is best for your brand.

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