Brand Bidding & PPC Optimization: How We Got Here (Part 1 of 8)

Welcome to part 1 of a series for search marketers on brand bidding and PPC optimization. This series will answer the biggest question facing PPC advertisers in 2016: How do I get meaningful growth numbers out of a crowded and competitive PPC market?

Unless you are completely new to PPC, it is tough to get the big gains that we once saw. As a marketing tactic, PPC has been mature for years, and few “easy wins” still remain. Many categories are dominated by large players (e.g., Amazon), long-tail keywords have become expensive, and the most advanced marketers have complex technology and expensive agencies on their side.

When you look at CPC data from Google, however, you hear a different story. Their 2014 10K stock filing shows a decline of eight percent in aggregate CPCs across their entire network from 2012 to 2013, and five percent from 2013 to 2014.

Look at just AdWords, and just the all-important first-page bid, and you see a different picture. First-page bid costs keep rising for both branded terms (+300 percent from mid-2014 to mid-2015) and non-branded ones (+75 percent for the same period), as RKG/Merkle showed in 2015.

Further, many advertisers still struggle with how (and whether) to bid on their own keywords. Bing released data at the end of 2015 showing that when advertisers bid on their branded terms, they received 31 percent more clicks (for retail ads) and 27 percent more clicks (for travel ads).

The Bing data recommended a strong brand defense to save lost clicks. Their data showed that when a retail brand did not bid on its branded searches, 34 percent of the missed clicks went to other ads, and six percent went to other organic listings.

With first-page CPCs on the rise, however, advertisers are tempted to look for any opportunity possible to reduce costs, and sometimes brand campaigns end up getting the axe.

So how do PPC marketers achieve meaningful growth today?

Brand Bidding: Your Secret Weapon

At The Search Monitor (Disclosure: my employer), we’ve found a promising solution: brand bidding. Or better said, the process of running an effective brand-bidding strategy focused on revenue growth and protection.

This solution didn’t arrive overnight. My company reviews ad monitoring data for thousands of branded searches. We’ve verified that competition for branded keywords is on the rise. If our clients simply do nothing, the result has been higher CPCs, lower average rankings, and even instances of advertisers and partners unknowingly working against each other.

Our data has revealed that executing a proper brand bidding strategy provides incredible value to an advertiser. We see that:

• Consumers love branded searches. The volume of branded searches is quite impressive. Using the AdWords Keyword Planner, for example, we see that in December 2015 alone, there were 24 million US searches for “macys” and 850K US searches for “Macys jackets.”
• Branded searches convert well for brands. Advertisers receive a large portion of their traffic from branded searches. One of The Search Monitor’s clients, a well-known travel brand, shared that by sponsoring their brand terms they were able to capture two-thirds of the paid search clicks generated by those branded keywords. In other words, if this client were not to sponsor its brand, then it would be giving up 66% of the clicks on its brand terms to competitors.
• Clicks decrease rapidly with more competition. Our data show that brand owners can lose 50 percent of their click potential as competitors increase.
• CPCs increase significantly with more competition. We also see that CPCs can jump more than 60 percent when competitors vie for the top three spots.
• Affiliate competitors distort metrics. Affiliates can throw off bid automation and conversion metrics by 20 percent or more.

Brand bidding as a tool for PPC growth became more evident during a panel I sat on at the Search Insider Summit in late 2015. The panel focused on the monetary gains from both brand advertising and protection. It also featured representatives from Marriott Hotels and their search agency.

As we each shared our experience with brand bidding, it became quite clear that we all shared the same perspective: the volume of brand bidding is on the rise, it requires considerable effort and focus to combat it, and brand protection in PPC can produce giant revenue results.

When I say “giant” results, I mean exactly that. Some of our bigger brand clients have told us that their strategy of protecting branded searches has earned them (or saved from loss) hundreds of millions of dollars annually worldwide.

As I share this message — and especially the revenue figures — with advertisers, the response has typically been: “We’re seeing the same thing, but we don’t know what to do.”

This Series: A Guide To Effectively Managing Brand Bidding

As a result, I created this educational series. The series will provide search marketers with a detailed understanding of brand bidding and how it should be managed to drive meaningful PPC growth. The series will be divided into eight parts:

1. Historical Context Of PPC Optimization (See below): I will discuss the evolution of PPC optimization from past to present, showing how brand bidding is the natural next step in this evolution.
2. Keywords: Once the historical groundwork is laid, it’s time to discuss the branded keywords themselves. This will be a metrics-driven article using The Search Monitor’s ad monitoring data covering brand and brand-plus keywords and their value to the advertiser.
3. Best Practices: Once keywords are analyzed for brand bidding and unwanted competition, it’s easy to make recommendations. This article will provide best practices in both quick responses and longer-term protective measures for your branded searches.
4. Partner Relationships: This article will describe one of the most effective brand bidding tactics: working with affiliates and partners to coordinate brand bidding and bolster your brand.
5. Addressing Competition: This article will share tips on how to deflate the rising costs associated with competition on your branded searches. I will discuss tactics such as copywriting, landing page development, rank and bids.
6. Legal Responses: Yes, there are legal recourses to reduce competitors on your branded searches. This article will discuss what the law says and how to make it work in your favor, and it will describe responses such as submitting complaints to the engines.
7. Effective Brand Bidding Techniques: Brand bidding can be very productive if done appropriately. This article will explain how to effectively bid on other advertisers’ brands and will show a few examples of larger brands who have figured out the winning formula.
8. The Future Of Brand Bidding: The brand bidding series will conclude with a summary of every tip previously discussed, as well as advice on how to keep your brand bidding strategy flexible in 2016 to adjust for inevitable changes.

The Historical Context Of PPC Optimization (Part 1)

The history of PPC is a short but intense journey. It started less than 20 years ago, in 1998, when GoTo.com introduced the pay-per-click concept at a TED conference. The company later turned into Overture and then was bought by Yahoo in 2003. Google, meanwhile, jumped into search in 1999 with 350 initial advertisers. A year later, it launched AdWords, then introduced a PPC version of AdWords in 2002.

The search engine landscape at that time was filled with lots of engines with even funnier names than Google. Remember FindWhat, Kanoodle, and LookSmart? Further, the notion of a black box of advertiser data hadn’t taken hold yet. Advertisers could see everyone’s bids, which the search engines hoped would drive up bidding

Eight years of fast growth went by before Yahoo and Microsoft teamed up in 2010 to offer PPC advertising across both search properties (Yahoo! Search and Bing) under a single ad platform, as an alternative to Google AdWords. Even in 2010, keyword costs remained low.

As competition increased, search marketers looked for ways to optimize their campaigns. In fact, “optimization” became a giant buzzword in PPC. Looking back, I have noticed five distinct cycles in PPC optimization, each with an increasing degree of difficulty. As you read through these five below, ask yourself where you think you currently are — and where you’d like to be.

Cycle 1: Keyword Lists

This initial optimization tactic was focused on the breadth of your keyword list. It was relatively easy because everything was new. Keywords were cheap! When pay-per-click was introduced, quality, decent-volume keywords could be purchased for five cents or less. Even five years later, a search marketer who bid more than a few dollars on a click would be laughed at.

With bid prices so low, search marketers were happy to experiment with the new channel. It was a learning environment, and competition remained low for years. Gains in revenue were tremendous as a result.

In 2011, Google reached approximately one million businesses advertising on its site. Bid prices followed the rise in competition, especially for the deep-pocket spenders. In 2011, the most expensive CPCs were paid by insurance companies. In 2015, law firms took the title, as certain clicks related to the health condition mesothelioma were priced at more than $1,000.

Cycle 2: Analytics

After building an exhaustive keyword list, marketers focused on their performance analytics for PPC optimization. They studied CTRs, conversion rates, CPCs and anything else they could monitor, then tweaked their strategies ever so subtly.

Google acquired Urchin Software Corp. in 2005 in response to advertisers’ increasing need for detailed performance data. Entire analytics departments were founded to process the huge volumes of click and spend data and find the next opportunity for optimization. As budgets increased, marketing executives started demanding more ROI and ROAS focus and wanted to see better attribution between click and sale.

The addition of advanced analytics enabled PPC gains to remain considerable.

Cycle 3: Bid Automation

After analytics, advances in technology made it easier to automate many of the huge data chores associated with optimization. In particular, the automation of bids let advertisers change their costs in real time to reflect changes in product costs or consumer demand.

Millions of PPC bids could be controlled by bid automation systems, and the quality of the data inputs (the analytics) became even more vital to PPC optimization. This new technology helped usher in the next cycle in PPC optimization.

Cycle 4: Pruning

After gains from analytics and automation were exhausted, the seasoned marketer took an even closer look at their campaigns for available refinements in performance.

Engines were constantly rolling out new optimization features for advertisers, and the popular ones were negative match, search queries and other cost analysis tools. They used these to prune out the big cost drivers that didn’t deliver the performance. Another huge leap of gains happened in cost optimization.

Cycle 5: Relevancy

The most recent cycle in PPC optimization occurred when marketers optimized their campaigns against the new arena of Quality Scores and search engine mandates for relevance.

The engines value greater relevancy at all costs and have rewarded those marketers that complied with cheaper CPCs.

Brand Bidding As The Next Cycle

Fast forward to the present day, and marketers are looking for the next tool or technique to generate large gains from PPC performance. This series will introduce the notion that brand bidding is the next cycle in PPC optimization.

The brand bidding genie is out of the bottle, and you now know the secret to driving meaningful PPC growth in 2016. I hope you’ll stay along for the ride as we dive deeper into the huge revenue potential offered by a successful brand bidding strategy.

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