An early conversation that we have with all of our clients is whether they should invest in bidding (showing ads) on their own brand name using Google Ads. Many clients do not feel that they should “waste” money on paid clicks when surely they will get the same traffic anyway through organic search.
Then the next conversation is “If I bid on my own branded terms, should I also bid on my competitor’s branded terms?”
This dilemma forms the crux of the brand bidding strategy, igniting debates among marketers. In this blog post, we’ll delve into the intricacies of this strategy, exploring its pros, cons, and best practices to help you make informed decisions for your marketing campaigns.
Brand bidding is a PPC strategy where businesses bid on their own brand terms or the brand names of competitors. Some small businesses believe that bidding on your brand terms is not worth investment as their brand keywords rank organically anyway and so people who search for the brand terms can still click on the search result to visit the website. Although this is true, neglecting to bid on brand terms risks ceding valuable search real estate to competitors who are eager to capitalise on every opportunity.
Above example shows how SCS bids on its brand terms to show their ad on Google. It is highly likely that SCS would appear in the first organic position for the search term “scs”, however, like many brands, they opt to bid on their brand terms to guarantee that they maintain the first position in the search results page (SERP).
In our experience, it always makes sense to invest in branded bidding especially if your business operates in a highly competitive market.
If you do not bid on your own brand name then your competitors can do so at a low cost and take some of your traffic and clients.
Lower CPC on Your Own Brand Bidding
The way that Google and Bing’s paid search ranking algorithm works is that the cost per click (cpc) you pay is influenced by your ad rank. The ad rank is a combination of your cpc bid and your quality score.
Ad Rank = Bid x Quality Score
In short, the higher the ad rank is, the lower your CPC is and therefore in order to achieve a low cost per click it is important to achieve a high quality score.
Quality score is largely determined by performance – on Google there are 3 influencing factors. Let’s understand with above example, how these factors score well for your own brand terms.
- Expected clickthrough rate (CTR): The likelihood that your ad will be clicked when shown. In above example, because a visitor is searching for ‘scs’, when they see the exact ad of what they are looking for, it is highly likely that he/she will click on the ad. This will result into higher CTR.
- Ad relevance: How closely your ad matches the intent behind a user’s search. In above example, you can see that ‘SCS’ word is used at several places – in the headline, in the description line and in the display URL. This increases ad relevance of the ad.
- Landing page experience: How relevant and useful your landing page is to people who click your ad. Once a visitor clicks on the ad in the above example, they will go to scs website’s page – exactly what the visitor is looking for. This delivers a high quality landing page experience.
Therefore on your own brand you tend to have very good performance across these 3 factors which gives you a higher quality score which means you pay a very low cost per click.
Your competitors pay a much higher cost per click than you as they will score lower on the above 3 influencing factors resulting into a lower quality score which in turn will increase the cost per click.
It therefore gives you an edge if your competitors are bidding on your brand terms – which segues us into why you should also be bidding on your competitor’s branded keywords.
Benefits of Bidding on Competitors’ Brand Terms:
Many brands target their competitor’s brand terms. Below example shows that DFS targets SCS (one of its main competitors in the upholstery industry) and shows their ad if someone searches for “scs” on Google. Let’s understand below the main benefits of using some of your budgets on your competitor’s brand terms.
Enhanced Visibility & Brand Awareness:
By bidding on competitor brand terms, businesses can expand their reach and visibility to a highly targeted audience actively searching for similar products or services. In above example, the customer searching for “scs” may have no previous exposure of DFS but they are now exposed to their brand.
Seizing Competitor’s Customers:
Targeting competitor brand terms enables businesses to intercept potential customers already considering alternative solutions offered by competitors. This strategy broadens the reach and taps into high-intent audiences, increasing the likelihood of conversions and customer acquisition.
Dominating Search Engine Results:
Bidding on competitor brand terms allows businesses to dominate search engine results pages (SERPs), positioning themselves prominently alongside competitors. Increased presence in SERPs fosters brand awareness, instils confidence among consumers, and reinforces credibility in the market. It is a great strategy for smaller businesses entering a market and keen to take market share from larger incumbents. Especially if there is a high level of dissatisfaction with the brands whose names you intend to bid on.
Challenges of Bidding on Competitors’ Brand Terms:
While the benefits of bidding on competitor brand terms are undeniable, it’s essential to acknowledge and navigate potential risks and challenges:
Trademark Compliance:
Adhering to trademark laws and regulations is crucial to mitigate the risk of trademark infringement and safeguard brand reputation. When you target your competitor’s brand name, you have to be careful not to include their name in the ad copy (headlines and description lines). If the competitor reports about this to Google then you risk Google pausing your ads or your competitor taking legal action.
Bidding Retaliation:
Targeting competitor brand terms may provoke your competitors and inspire them to take retaliatory actions by targeting your brand terms. This action can increase your CPC and risk decreasing traffic on your brand terms. If you are concerned about this then you may choose to target only those competitors who are targeting your brand terms.
High Cost per Conversion:
As mentioned above, you cannot include the competitor brand name keywords in your ad copy and as a result the quality scores on competitor keywords stays lower. Also, many visitors who click on your ad, expect to see your competitor’s website and so the conversion rate remains lower on competitors brand terms resulting in higher cost per conversion. So if you have a limited budget then you should allocate your budget to better performing campaigns.
Tips for Success in Competitor’s Brand Bidding
- Craft Compelling Ad Copy: Emphasise unique value propositions and differentiation in ad copy to captivate users and drive conversions effectively. Remember that the visitors have searched for your competitor’s brand term but are seeing your ad so it’s your job to entice them to click on the ad by highlighting competitive advantages and value propositions.
- Create Engaging Landing Pages: If you only send visitors to your homepage or product page, they may think they clicked on the wrong link and leave your website. But if you develop comparative landing pages that provide comprehensive information about offerings and showcase superiority compared to competitors, it can increase user engagement and time on the website which can result into more conversions.
- Ensure Legal Compliance: Consult your legal team to ensure compliance with trademark laws and regulations, minimising the risk of legal repercussions.
Bidding on competitor brand terms in Google Ads can be a strategic move for businesses looking to expand their reach, attract new customers, and gain a competitive edge in the market. However, it’s essential to approach this strategy thoughtfully, considering the potential benefits, challenges, and ethical considerations involved. By implementing best practices and staying vigilant in monitoring campaign performance, businesses can unlock the full potential of competitor brand bidding while maintaining integrity and trust with their audience.
