Should You Bid on Your Brand Using AdWords?
At Internet República we have always recommended a combined SEO and SEM strategy to prevent them functioning like independent silos,- which makes Google the only beneficiary.
Based on the duration and budget for each project, it is better to create a balance, leaning towards either one or the other. But always try to optimize the investment in Google AdWords in order to have an impact on the largest possible number of users. At the end of the day, Google is the source of traffic for both.
The main friction point between SEO and SEM projects is in the brand name searches. This is especially true for well known brands which are searched for thousands or even millions of times every month. And even though the cost per click for this type of search is usually very low, the sheer volume can mean that your entire campaign is investing in this type of keywords, where you are probably already occupying the top positions organically (free). Or, in other words, we are paying for something that we could get for free.
It is true that there are cases in which the competition appears in this type of search, either because they directly bid on our brand or because they buy generic terms with broad overlap. The question here is: Do the visits which they may take away from us justify investing most of our budget in brand name search?
How is this spending usually justified?
The answer given by most people who are responsible for the AdWords campaigns are generally one of these two below:
- Yes – because we have to protect ourselves from the competition and with this campaign we can be sure that we are first.
- Yes – it is clearly justified because the invoicing that the campaign generates is well above the amount invested.
In the first case, an analysis of the data needs to be done in order to find out the real volume of traffic that the competitor is robbing from us. Even though the competitor is advertising in our search, that ad is not very relevant for the user, and most likely receives very few clicks at a high cost (you can even do a reverse test to see firsthand how profitable these campaigns are).
There are also cases in which official distributors are the ones bidding for the brand, with ads which are relevant to the users. In these cases, the brand owner will often forbid his distributors from bidding on his brand, guaranteeing the organic traffic goes to the corporate website.
Our experience tells us that most of the time it is not profitable for the company to run these campaigns, although each case needs to be analyzed individually. In an environment in which you can measure practically everything, making decisions based on opinions is a luxury.
How to Calculate the ROAS?
The second case is an affirmation based on data which would convince anyone. The problem is that, in truth, it is only counting part of what is happening when you treat an AdWords campaign like an independent campaign, instead of including the SEO traffic in the equation. Therefore, the ROAS of a branding campaign should be measured based on the incremental traffic that the campaign generates, since a good part of this traffic would be received anyway, even without a campaign. That is to say:
Traffic earned = Traffic for AdWords branding campaigns – Organic traffic lost
The organic traffic which is lost can be calculated as follows:
SEO traffic lost = (Total current impressions * CTR SEO history/100) – Current organic traffic
Using this formula, and applying the conversion ratio of the campaign only to new traffic, we can estimate the sales that have been generated thanks to the branding campaign and calculate the ROAs based on this figure (which is probably not as positive as if we were to evaluate the SEM campaign by itself).
Finally, it is very important that if we take this approach for search marketing projects, the objectives for conversion, ROI, CPC and other metrics should also be evaluated together with the SEO project. If it is not done this way, we will be unfairly measuring the job done by sponsored searches.
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