• by Matthew Greitzer , Op-Ed Contributor, March 27, 2009

I was sitting around earlier this week trying to think of a compelling topic for this month's Search Insider and drawing a blank. Fortunately, sometimes material falls into my lap, as it did this week when someone on my team discovered this: over the course of a month, a single branded keyword in one of our clients' campaigns spiked in CPC by 300%. This happened with no discernable changes in the competitive landscape, maximum quality score, a 30% click rate, a multi-year click history and constant ad copy and landing page assignment. To summarize: CPC increased by 300% for no good reason -- and on a high volume, branded keyword, no less! What gives?

If this were an isolated issue it would not likely merit mention in this 750-words-or-less column. The vexing issue of branded keyword price spikes, however, is frequent and increasing. I could turn this column into a rant about CPC juicing and more, but I will refrain. Rather, I would like to propose a fair and practical solution to the issue of branded keyword CPC volatility that satisfies brand owners and still allow search engines to monetize branded keyword traffic. There are two components to this proposal.

First, offer brand owners the option to purchase select branded keywords for a flat monthly fee, and in turn lock in the premium position for those keywords. The fee should reflect the incremental value of branded keyword clicks along with a reasonable premium for price stability and the brand value of a guaranteed top position. And second, run a secondary auction for competitors bidding on branded terms, but on the right rail only, leaving the premium position for the brand owner. Enforce relevant trademark policies in the secondary auction, and use click rate and quality score to filter out irrelevant advertisers and brand traffic poachers, as is done today.

The benefits to this approach are multiple. Searchers maintain a diversity of choice through the premium ad unit, algorithmic listings, and secondary listings on the right rail. Brand owners gain budget stability and predictability, broad creative license decoupled from click rate, and a guaranteed premium position. Search engines benefit, too. While they may lose a small percentage of revenue initially by eliminating cost spikes in high volume branded terms, they likely make that money back over time as brand advertisers funnel unused dollars into unbranded keywords. And they maintain the auction-based revenue stream from non-brand owners in the secondary auction on right-rail placements.

Additionally, search engines eliminate the risk of brand advertisers pulling down branded keywords entirely due to unreasonable CPC costs, courting goodwill with large advertisers whose dollars they need to support their portal and content businesses. This, in turn, assuages a key bias large brand marketers hold against search engines, who they perceive as freeloaders benefiting from the massive investments brand owners make in television, print and elsewhere that translate into branded search queries. The more senior the marketing executive, the more firmly this conviction is held.

If this plan sounds familiar, it's because Yahoo already offers it (or something fairly close). Their Rich Ads in Search (RAIS) program was the first to offer brand advertisers guaranteed position in premium search positions, eliminating price volatility. Yahoo upped the ante, too, by providing innovative ad customization options far beyond 95 characters of text. While the RAIS program is not perfect, especially in regard to pricing, Yahoo should be commended for releasing an offering that reconciles the needs of both brand owners and search engines and still provides a compelling user experience. Yahoo should commit to expanding the RAIS program across the advertiser base, automating the setup and management, and adjusting the pricing where it exceeds the value of the placement. Google and MSN should offer similar programs, open to all advertisers in an automated, self-managed approach.

It's doubtful that this column alone will spur on change at the big three engines. But personally, I am interested to see how this proposal is received in the search marketing community. Thoughts or comments? Share them on the Search Insider blog, or email me directly.