The advantages of playing offense and defense when buying your own name
Hamlet asked, "To be or not to be?" Advertisers have to ponder "To bid or not to bid?" - on their own name. And it is the question brand managers have the most trouble answering. Sometimes bidding on your own name is a smart idea, other times it just does not make sense. The answer must be considered in the context of many, often unrelated, factors.
First, determine how much space you already own on the page. The main component of a Search Engine Result Page (SERP) is the natural search rankings. The paid ads comprise a fraction of the page, albeit the profitable one. The natural (organic) results comprise the majority of the page. The rankings are theoretically presented in order of relevance. Importantly, a Web site can have multiple site links listed. Not only can example.com be listed, but so can example.com/faq or example.com/coupon. Each site link allows a brand to own more space on the page. Like retail shelf space, the more you own the less your competition can. If your brand has numerous site links listed, and there is little competitive presence, I would not bother bidding on your own name. In that case you are just competing with yourself.
Be warned: The lack of competitive presence is an increasingly rare occurrence. Today, even the least common names have at least one bidder. Large e-commerce Web sites like eBay or Amazon bid a few cents for those words. If they can sell your product, they will bid on your product's name. This may not be a bad thing - especially if your Web site does not support e-commerce. Since the consumer was already looking for you, you have not lost a sale. On the other hand, redirected traffic hampers your ability to achieve other less tangible objectives (provide more information, introduce brand extensions). Clearly this is a mixed blessing.
While e-commerce sites may be your frenemies, competitive brands are the real enemies. If other brands are bidding on your product's name, the urge to bid dramatically increases. Now, bidding on your brand's name is both offensive and defensive. Coupled with the top organic position, a paid ad can push a competitor below the fold. Most consumers never scroll past the top ads. I estimate click volume falls by 25 percent for each downward position. Still, increased competition usually means an increase in click prices. It is possible that your competitors are simply trying to distract your budget. If you are spending money on your own name that is less you have to spend on their name. The best defense is a good offense. Regardless of their intent, bid prices will increase. Consider the increased costs as you make your decision. Balance your goal cpa with your brand objectives. If your competition can divert potential customers at a relatively low cost, then enter the fray.
Factoring e-commerce into the equation further complicates the decision. Sites that include an e-store can afford to spend more per click because they can trace an immediate ROI. Generally speaking, if you can't monetize increased CPCs don't try to compete. However, corporate priorities often run counter to this suggestion; CEOs often want to own the first ad position regardless of price. If management can be dissuaded, this presents an opportunity to invest more in organic search. Given my druthers, I would prefer the top few organic positions to the first paid spot.
Most brands never make a proactive plan. Instead, like Hamlet, they simply muddle through, reacting to external events. In the end, it is always a safe bet to bid on your own name, but it may not be the most economical.