Commentary

A Short Proposal For A Better Branded Buy

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.

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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.

2 comments about "A Short Proposal For A Better Branded Buy".
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  1. Aaron Goldman from 4C, March 27, 2009 at 3:36 p.m.

    I second your motion, Matt!

  2. Steve Haar from Fanatically Digital, March 29, 2009 at 10:40 p.m.

    One of the attractions of search engine marketing is that, if done properly, it propels us into an understanding of our clients' business from pre-click to sale, and being able to clearly demonstrate value. We run client programs that close online as well as offline; our compensation only happens when our clients close the sale. We spend our own money, track results with our clients, and run the risk of losing money if we screw up. This model is one of the reasons our clients have come to us to run their corporate search programs.
    <br><br>
    Since this is our own money, you might think that I would be in favor of fixed placements, for all the reasons Matt points out. However, stability comes at a price... growth. If we see that our CPCs are increasing day over day, we have to ask ourselves, "did someone figure something out that we missed?" Rather than seeking the shelter provided by a fix placement model, the beauty of the market-based system of search is that it gives you day-to-day, hour-to-hour feedback on how well you are doing. Not just in how well you hold your keyword position, but how well you help your clients grow their sales.
    <br><br>
    I shared a bit more (quite a bit more) of my perspective <a href='http://results-marketing.blogspot.com/2009/03/branded-keyword-bidding-vs-fixed.html'>here.</a> it came out a bit more flip than I intended, but all intented to foster convesation...

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