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Brand PPC: a Waste of Money?!?

The Microsoft/Atlas study reminds me of the famous Mark Twain quote: “There are 3 kinds of untruths in this world: lies, damned lies, and statistics.”

New research by Microsoft suggests a big chunk of search ad spending is wasted because advertisers pay top dollar for high ad placements clicked by consumers who are en route to their sites anyway. Listings tied to such “branded” keywords, typically a company’s name or products, eat up about half of search budgets, Atlas estimates.

“The reality is those people are already intending to go to your Web site,” said Young-Bean Song, vp of analytics for Atlas, formerly part of aQuantive and now a unit of Microsoft. “What you’re really paying for is a glorified Yellow Pages listing.”

Atlas studied 30 search ad campaigns reaching 120,000 users on Google, Yahoo! and Microsoft. It found that nearly half of clicks on ads came from people who had already visited the advertiser’s Web site. Moreover, about 60 percent of visits came from “branded” words, like the company’s name, while just 29 percent were from people who searched for generic terms and had never been to the advertiser’s Web site—the type of new customers search is meant to attract.

– Brian Morrissey, AdWeek, Are Search Ads a Waste of Money?

I hate to be snippy, but whose search programs did they study? Our 100+ clients aren’t spending anywhere close to 50% of their money on brand ads. The average is about 5%. It does get higher for folks who are manufacturers competing against their distributors on their brand name, but to suggest that 50% is the norm is irresponsible!

Either these folks were studying incompetently managed PPC programs, or they were looking at Hitwise traffic reports that don’t distinguish between paid and organic traffic. In either case, they should know better than to issue misleading statistics, and if they don’t know better…

To the question: is it worth any money to advertise on your brand name and trademarks? I think the answer is ‘yes’.

Granted, by and large the people searching for you by name are likely to find your site and buy from you regardless of whether you have an ad running. However, by spending a little money, you can:

  1. Control your brand message
  2. Tout short-term offers to steer their visit and add urgency
  3. Prevent brand squatting by your affiliates, saving commissions to those thieves, and
  4. Prevent “Broad Matching” algorithms, and unscrupulous practices from putting your competitor’s ads above your natural search link for brand searches

Are these benefits worth a fortune? No, but they’re worth something.

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Comments
22 Responses to “Brand PPC: a Waste of Money?!?”
  1. Dan says:

    Based on Microsoft’s research, maybe the 50% reflects that 1/2 the companies engaged in search bidding are doing it wrong.

  2. Could be, Dan, could be. The thing is, the research was really done by Atlas, one of the biggest players in Search Engine Management. I just can’t wrap my brain around the notion that they don’t know any better…

  3. Mel66 says:

    George, I’m listening to Atlas’s webinar on this topic right now, and I saw the 50% figure in the presentation. They were counting type-in traffic as part of the 50%. It still didn’t seem right to me.

    They also used the eBay Google takedown as a prime example of why advertising on your brand doesn’t affect traffic. A very non-representative example, if you ask me. Most businesses do not have the traffic nor the brand recongition that eBay has.

    I’m not buying their argument either. If brand terms are driving positive ROI, why wouldn’t you keep running them?

  4. Interesting Mel. When you say “type-in” traffic, you mean folks typing the url into the browser and going directly to the site? That’s wacky! If the argument is you’re wasting money, wouldn’t you only count the paid traffic, not the free stuff?

    I actually don’t think ads on your brand contribute much incremental traffic, but it’s so cheap that it doesn’t take much to make it worthwhile, particularly if you’re saving money on affiliate rev share commissions to boot.

  5. Kari says:

    50% really surprised me. On just Google, our spend on branded terms is not even one-half percent of our total spend, and our ROI on those is consistently 300+ percent. How is that a waste? Notice how the report didn’t mention branded-term ROI for those advertisers…even if half your budget was eaten up by branded-term clicks, then if you were getting a really great ROI it wouldn’t be a waste.

  6. Mel66 says:

    Sorry, I wasn’t clear about type-in traffic. Altas was referring to people typing URLs into the search box of a search engine: you know, going to Google and typing “www.rimmkaufman.com”. They claim this represents a significant amount of clicks on paid ads.

    One of their suggestions was to pull an eBay and test taking down your branded terms and see what happens to your ROI. I asked why anyone would do that and leave the space open to competitors. The answer? “Well, we don’t recommend taking down your ads and leaving the space open to competitors.” Huh?

    I guess if you are losing money on your branded terms, you shouldn’t continue to run ads – but I can’t imagine that’s true for too many businesses.

  7. Geld Lenen says:

    Mel66,

    I think you had some more miss understandings… And the whole research itself is pretty doubtfull afterall.

  8. Prepaid mobiel says:

    We also have advertising with branded names and I also agree that it is a waste of money. You almost always rank #1 at search engines anyway with your own Brand.

  9. venkatesh says:

    Let’s say you search for adidas. You see the ad for a nike store and end up purchasing nike. If you won’t bid for your name, somebody else will steal your name.

  10. b2b guy says:

    re: the 50% figure. They were probably looking at advertisers with a decent brand who were only spending a whopping $500/mo on paid search. You’d be surprised (or maybe you wouldn’t), how many are still only dipping a toe in the pool.

  11. Good observation, B2B Guy :-)

    You may be right, but again, we’re talking about one of the largest agencies in the PPC space. They don’t even talk to folks who can’t spend real money.

    Don’t know, given that they recently dumped their internal search platform — which was a joke — in favor of another 3rd Party tool, I guess I shouldn’t be surprised at anything they say or do.

  12. Simon T. says:

    Great observation, George!

    I searched a long time for a articel about this topic with some data behind and now found it.

    Its difficult to explain to the costumer without a established authentication, even if the results are clear.

    Thank you from Germany

  13. Thanks, Simon. Your mileage may vary but I’m betting search behavior in Germany is not much different than here.

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