Paying for your own brand name? Well, there are several reasons why you should invest in this visibility and traffic. I will outline three of them below.

Typically, from a last click attribution perspective, some of the best performing keywords in your AdWords account, will be associated with your brand name. It will also be some of the marginally cheapest keywords in your account as you achieve a high degree of relevance. For instance, if your brand name is Nike, it is quite natural that people searching for the term “nike” will click your ad if this is the first result that appears on the search engine result page (SERP). However, once your brand reaches a certain amount of awareness in the market, you will notice that even though the cost per click is low on your brand terms, the total cost of staying visible on these terms become significant. Looking at a typical SERP when searching for your brand terms, you will also notice that – with a little SEO – your website will appear at the very top of the organic results.

This begs the question; should you really pay in order to be visible on your own brand?

Well, there are several reasons why you should invest in this visibility and traffic. I will outline three of them below:

Competitors and Affiliates

There is a limited amount of ad slots on any given SERP. By not owning the available paid real estate on your own brand terms, you leave the door open to competitors and affiliates to own this position. We have seen that about 40% of clicks go to competitors when no brand ad is visible. When your own brand ad is visible, that same share is about 10%. This means that by advertising on your brand terms, you virtually guarantee that you will capture most if not all the traffic on these searches. Given the low cost and high quality of this traffic it should be seen as advantageous to capture as much as possible of it. The reason for why it is usually advantageous to buy this traffic has to do with alternative costs. Let’s say you pay a commission of 20% to an affiliate and they would capture the traffic, in that case it means that you should run brand ads as long as you can keep your own cost of sales below 20%.The opportunity cost of giving up this traffic, given a constrained marketing budget, will in most cases be very high.

Incremental traffic vs cannibalization

A frequently asked question is whether showing an ad on your brand term cannibalizes your organic traffic. It is easy to imagine that you would capture brand traffic on your organic listing should you choose not to advertise on your brand terms. However, our studies have shown that about 80% of brand traffic is incremental, meaning 80% of brand ad clicks are traffic that would not be captured by the organic listing. Showing a brand ad also gives you more creative flexibility in what to communicate on the SERP, by using offers, ad extensions, and messaging in more dynamic way than what is possible on your organic listing.

Brand Visibility and SERP Real Estate

A study by Bing* has shown that when a brand ad is visible on the SERP, overall clicks increase 45%. Analyzing three million impressions in the retail vertical they also found that 60% of clicks went to the brand owner when no brand was present. When a brand ad was present on the SERP, this share increased to 92%. This underscores the point that simply owning an even larger share of the SERP will increase not only overall CTR on the SERP, but it will also make it almost certain that the brand owner captures this traffic.

The above summarize some of the arguments for why you should bid on visibility and pay for clicks on searches related to your own brand. Now, it is also important to note that clicks received on terms related to your brand on the SERP will be due to investments you have made elsewhere in your marketing mix. Any costs related to clicks on brand terms in paid search should be attributed to effects from your wider marketing mix, and a high performance on brand terms in paid search should not be viewed as a high performing marketing channel on its own. Something will have triggered a user to search for your brand. Precis works with advanced data driven attribution modelling and marketing mix modelling in order to analyse these effects.

Håvard Nyberg Partner & CEO Norway