PPC ads (such as Google’s AdWords) are set up to appear when certain search terms are entered into Google or another search engine. For example, my own ads (when running) appear for obvious terms such as ‘copywriter’.

Brand bidding is the practice of bidding on the brand terms of a third party, so your ads appear when their brand is entered as a search term. For example, an insurance company X might bid on the brand term ‘Aviva’.

The idea is to grab traffic on the brand term and redirect it to your own site. The brand bidder’s reasoning is that if they can write a sufficiently eye-catching, memorable ad, the web user will click on it, arrive at their site and choose their product instead of those of the brand owner they originally searched for. The aim is diversion, in both the psychological and user-journey senses of the word.

Affiliate brand bidding

Affiliate sites sometimes bid on advertisers’ brands without authorisation, diverting traffic that rightfully ‘belongs’ to the advertiser to their own sites before directing it back to them, generating a commission from the advertiser in the process (while also inflating the bid cost for the advertiser). For example, a hotel booking site might bid on ‘Hotel Hilton’ (or whatever), perhaps promising reduced rates, to grab people who would probably have found the Hilton anyway.

One way to fight against this is for the brand owner to authorise a handful of affiliates (a ‘closed group’ in network terminology) to bid on its brand, with the traffic directed to approved landing pages or microsites devoted to the advertiser’s products. If done effectively, this technique allows advertisers to harvest a significant proportion of the traffic from page-one results while blocking out rogue bidders.

How brand bidding works

To illustrate how brand bidding works in practice, let’s work through an example. Fountain Partnership, the ethical copywriting agency based (like me) in Norwich, have recently begun bidding for my brand term, ‘abc copywriting’. The image below shows their ad appearing for the relevant search.

At the time of writing, Fountain’s ad appears for ‘abc copywriting’ and ‘copywriting abc’, but not ‘abc copywriting norwich’. This suggests that it has been set up to appear on an exact match for those two phrases. (You can read more about AdWords keywords matching options here.)

But couldn’t the ad also be targeting a broad match on ‘copywriting’ – as the ad for Copy Unlimited (on the right) presumably is? I don’t think so, because a search for ‘copywriting’ reveals that ad still appearing on page one, while Fountain’s doesn’t appear on the first ten pages. So we can deduce that Fountain are almost certainly targeting the brand term with their ad.

The legal position on brand bidding

In May 2008, Google announced that it was allowing brand bidding for the first time. From then on, advertisers could use third-party trademarks as target keywords, provided those trademarks don’t appear in the text of the ad. (It’s easy to see how using the brand in the actual ad could constitute ‘passing off’ – pretending to be someone else for commercial gain.)

This change proved controversial and was challenged in the courts in several countries, but to no avail – the outcome was that advertisers can bid on trademarks as long as the trademark terms aren’t included in the ad creative.

As a result, advertisers who depend on digital marketing have to be extremely vigilant about who is bidding on their brand, often using ad-monitoring technology to help them. (Read Google’s full policy on trademarks in PPC ads here.)

Assessing the threat of brand bidding

How much of a threat is brand bidding?

The search for a specific brand signals a strong interest in researching, or purchasing, a specific brand. Users are generally not in browsing or comparison mode when they search for brands.

Some brand owners use this argument to ignore brand bidding, whether by competitors or affiliates. ‘If someone’s searching for my brand,’ they reason, ‘they’re not going to click on an ad for a rival domain. And even if they do, they’ll realise their mistake immediately and click through to my site instead.’ This argument is given more weight if the brand owner appears at #1 in the natural results for their brand – as nearly every brand (including mine) does.

It sounds comforting, but it’s almost certainly not true in every case. Research shows that a significant proportion of search engine users (around 20%, from memory) click on the ads that appear above searches (as Fountain’s does).

It’s only natural, since they occupy the screen position where high-ranking natural results would appear in the absence of ads. People are accustomed to finding strong, relevant results there.

However, the raw stats are too crude. Many factors affect what people click on – most obviously, how relevant the content of an ad or search result is to their own search term. For a brand search, 20% is almost certainly wildly optimistic for an ad that doesn’t include the brand term in its text. But it could still get some traffic. And remember that it’s a risk-free deal for the brand bidder – they only pay when people click. And with little or no PPC competition for the brand term, they could pick up some very cheap visitors who are definitely interested in their offering on a general level.

Another factor is where the ad takes the visitor. Fountain Partnership’s ad simply leads to their home page, funnelling the web user down their standard sales channel. Arriving at this point, a user looking for my site might well backtrack, finding no message tailored to their search. But the ad could easily lead to a page featuring, say, a point-by-point comparison of ABC’s service against Fountain’s. Such a tactic might make visitors more likely to remain at their site.

See this post for an account of how Mazda ran ads targeting a term used by Pontiac as the basis for their online campaign, successfully diverting a huge wedge of valuable traffic to a page that compared their cars favourably to Pontiac’s.

Responding to brand bidding

Like any brand owner faced with brand bidding, I now have to decide what to do. A fair few people search on my brand: 43 visitors reached this site from that search during August 2010, which is more than one a day. What’s more, that traffic is very valuable to me, because it represents pre-qualified visitors – people who’ve heard of ABC and are motivated enough to search for the brand. For a B2B company, one visitor like that a day is worth having, and therefore possibly worth paying for.

The most common (and easiest) way to respond to brand bidding is to bid on your own brand, outbidding the brand bidder for the top AdWords slot. This was my chosen response and the image below shows the search results with my ad appearing.

Since I can use my own brand in the ad text with impunity, I benefit from having the matching words emboldened, which always helps to draw people’s eyes to an ad. (Moral: always include the search terms in PPC creative if you can.) Of course, the Fountain Partnership ad still appears, below my own. But I now control more of the screen ‘real estate’ for my brand, including the #1 PPC position and positions #1 and #2 for natural search (Google usually grants me a second position for this blog). Short of hiring affiliates, that’s as good as it’s going to get.

Is it worth bidding on your own brand?

Some marketers advocate bidding on your own brand regardless of who else is targeting it, for a number of reasons. As explained, it gives you more ‘real estate’ on the all-important page one. It gives insurance against temporary blips in your natural search position. It allows you to vary the marketing messages you present to searchers before they click. And, in the absence of competing ads, it’s cheap. (More details on this here.)

However, if you’re bidding against rivals, you’re effectively being forced to pay for traffic that, if not for the brand bidders, would almost certainly have reached your site anyway – which is galling as well as costly. In this situation, rival bidders are like trees in a forest, trying to grow taller than each other to reach the sun in a sort of search-marketing ‘arms race’. Ultimately, the endeavour absorbs resource and marketing effort for all concerned, but leaves the relative positions of the players pretty much as they were before.

Tags: AdWords, affiliates, brand bidding, brand terms, closed group, Fountain Partnership, PPC, SEM, SEO