How modern day mobsters hold your business ransom online

Imagine a scenario where your business is offered “protection” in exchange for a large sum of money.  And if you decline, bad things start happening.  Really bad things….

For me it is not hard to imagine a scenario like this.  Growing up in a rough suburb of Liverpool, it was common that you were asked to pay a sketchy teenager to “watch” your bike as you locked it up outside the cinema.  What was left of your bike was not pretty if you declined the fee. And  we’ve all seen and loved good gangster movies. Instinctively we know this behaviour is wrong and unjust, even if it is amusing to watch on TV.

Yet business owners and marketers seem more than willing to pay larger and larger portions of their advertising budgets to the largest mobsters of our time.  These payments, if looked at closely, are nothing other than a shake down.  We even thank the mobster for delivering qualified, high performing traffic to our website.

You’ve probably guessed it by now, but the mobsters I’m referring to are search engines.  The irony is not lost on me, that as a growth marketer much of my livelihood has been built on search engines.  But what started as a powerful marketing tool with the potential to be used for great things, has turned into something far more sinister.

Search engines today are holding brands ransom, on their own brand search terms, for larger and larger sums of money.  If you are a business owner or marketer that has invested in building a loyal customer base and name for your business, then you know how important it is to protect that name.  Unfortunately for you, the search engines and your competitors know the value of this traffic too.  When people go to search for your business by name, if you are not paying the search engines for ads to protect that name, then you are replaced by competitors who do, and who in turn siphon off your most valuable traffic.

When a competitor places an ad on another business’ branded search terms this is referred to as “brand bidding”. Brand bidding has been happening for many years now.  It may not be the most high-moral practice, but in itself it is not terrible either.  Most can agree that some competition can bring out the best in us and that there is value in a free-market economy.   Does allowing brand bidding really make the search engines modern day mobsters?

Not really.  Brand bidding itself is not the problem.  The real issue lies deep within the blackbox of the algorithms that determine how to charge advertisers for clicks.

In the earlier days of advertising and brand bidding, you could protect your brand for a relatively small portion of your ad budget.  Let’s use a hypothetical example to illustrate this.

“Joe’s Shoe Store” in 2012 might have spent 90% of Joe’s ad budget on keywords like “Women’s Sneakers” (also known as non-brand keywords) and 10% of the budget on keywords like “Joe’s Shoe Store”.  It might cost Joe $3 per click to advertise for Women’s Sneakers, but likely only about $0.20 per click to capture the vast majority of the traffic searching for Joe’s Shoe Store.  

The reason Joe could protect his brand traffic for as little as $0.20 per click is because the algorithm weighted the value of ad relevance more than the bid.  If you were “Mike’s Shoe Store”, and you wanted to advertise using “Joe’s Shoe Store” as a keyword, you were likely going to be paying several times more than Joe to get any kind of visibility. This was because Mike’s ad had lower relevance to Joe’s branded search term.

In the last two years, I believe the algorithms have shifted.  Search engines appear to no longer be weighing ad relevance as heavily in the bid auction. Our agency has seen brands go from spending $0.20 per click to protect their brand search terms, to  spending upwards of  $4.00 per click.  This on its own is pretty bad, as the search engines are not driving any additional value, they are just charging more for traffic that should really belong to the business in the first place.  But it gets worse….

Smart shopping campaigns and dynamic search ads are driving more and more branded traffic under the disguise of prospecting campaigns.  Your shopping ads are brand-bidding on competitors, even if you are not aware of it.  And their shopping ads are brand bidding on you.  All this goes to help the search engines drive up costs on traffic they played a very small part in delivering.

And if that is not enough, changes in tracking capabilities, as a result of Apple’s recent push for privacy, make attributing results to non-brand search terms harder and harder.  Businesses are seeing a drop in performance in non-brand search, and so they are choosing to invest more in keywords that directly drive conversions.  The result is that brand’s are spending more and more on capturing their own brand search traffic.

I chose to write this article because in the last 6 weeks I’ve audited 13 search advertising accounts for businesses seeking improvements to their digital strategy.  In only 1 ad account was the advertiser spending less than 50% of their marketing budget on branded search terms. In the other 12 accounts the advertisers were not even aware that the majority of their budget was going to their own brand search terms. In two cases less than 30% of their ad budgets were being spent on non-brand keywords.

Here is my advice to companies doing business online and anyone with a search advertising account:

5 Steps to taking back control

  1. Set low manual CPCs on your brand campaigns. Smart bidding on brand campaigns is going to drive up the cost because these keywords convert really well.  You may lose some traffic, but invest what you save in prospecting and building your brand.
  2. Separate out brand search terms in your shopping campaigns and have a different bidding strategy for them.
  3. Stop directly brand bidding on your competitors.  When they see your ads, they will start bidding on your brand search terms.  And as costs escalate, the only winners  are the search engines.
  4. Balance your ad budget to make sure you are spending enough on growth and non-brand search terms. Unless you are a huge brand that is under attack, we advise clients not to spend more than 10% of their search engine marketing budget on brand protection.
  5. If your brand is under attack, consider signing up for The Search Monitor’s free Brand Protection course and learn how you can fight back!

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