How to Advertise Profitably on Brand Terms

Advertising profitably on your brand terms requires some dynamic strategy and a real appreciation for the game you're playing. Whether you advertise on your brand terms or not, you’re already caught up in that game… and the rules are designed to drive profit to Google. Your competitors have taken their turns. They have stolen what was yours. The clock is ticking. What’s your move?

“I’m not convinced advertising on our brand terms is getting us more sales. People are just clicking our ads instead of our organic listings, which is just shifting revenue from free to paid. Is branded advertising actually getting us additional sales, or are we just paying for sales we would have received for free?”

This is a common concern among ecommerce merchants. But this is not an either/or situation. Branded advertising does both. It’s true, there is no way to avoid paying for sales you would have already received, but it also gives you additional sales you would not have otherwise received.

What matters here is whether the amount you spend on the branded advertising is worth the additional sales you receive. Figuring that out is the key. And the actual reality is that this isn't a question of whether you should advertise on brand terms or not. It's really a question of how aggressively you should bid on brand terms, and at what level it is the most profitable for you. If your margins are low and you get few additional sales, then you shouldn't spend as much. If your margins are high, it might be worth it to be very aggressive, even if you only get a few additional sales. That equation will vary for every business, and will change over time depending on what your competitors do, and how Google manipulates the rules of the game.

This article will explore the issues around advertising brand terms:

1 - Why You Have to Advertise on Brand Terms
2 - But Really, What Is a Brand Term?
3 - Understanding Competitors Targeting Your Brand Terms
4 - How to Determine the Lift
5 - Is It Worth It?

Let's get started!

Why You Have to Advertise on Brand Terms

If you're not currently targeting brand terms in your search ads, you need to start now. Even if you think it's not worth it, or you've had bad results in the past, turn it back on. Why? Because the only way to get granular reports in Google Ads about what's going on with your brand terms is to actively advertise on them. That’s right, you must be advertising on the terms in order to even see what your competitors are doing.

Two reports are key: The Paid & Organic Report, and Auction Insights. Let's start with Auction Insights.

Auction Insights is a report available on a sub-tab of the Keywords tab inside the Google Ads system. The report displays the top competitors you have in ad auctions for the scope you are looking at. This report is available at the Campaign, Ad Group, and individual Keyword level. And what matters here is being able to look at a particular keyword and determine who else is advertising against us on that keyword.

The Paid & Organic Report is available as a predefined report on the Reports menu under Basic reports. This report gives data for the entire account by default. But you can use filters and timeframes to drill down to a much more granular level, such as for individual brand keywords or search terms.

If you don't run ads, you don't get this data. Note that you don't have to spend a lot. But Auction Insights only gives you information about who is competing against you for ads you're actually running in the auctions you've actually participated in. And the Paid & Organic report is the same. You have to actually be a contender in ads for your brand terms in order to have data available for your brand terms and what's going on with your competitors.

Even if you decide branded advertising is not worth much to you, it still pays to advertise on your brand terms at a low level of spend in order to be able to continue to monitor these reports. They are extremely valuable to your business. They're a great tool to show you information that's not available anywhere else, and a wonderful early warning system about other people advertising on your brand terms and trying to lure your customers away.

But Really, What Is a Brand Term?

People throw around the phrases “brand term” or “brand keyword” like they actually mean something. They don't. Or rather, they mean whatever you think they mean. They're fuzzy and imprecise, and there's no generally accepted understanding of what they mean at all. There's actually no possible way to divide up the world into clean buckets of “brand terms” and “non-brand terms”. Let's explore some examples.

A huge number of companies are named after what they do. A company I used to work for was ClearBags. Guess what they sold? Yep, clear plastic packaging. Technically, the brand was “ClearBags” but a huge number of people didn't know it was all one word, and searchers frequently typed “Clear Bags” as well, with a space. So maybe we should consider that a brand term as well?

What if a Google searcher types just “clearbags”. Obviously a brand search, right? Well, I think we can all agree that's likely. But if you ever look over your search data, you'll see all sorts of examples of people mistyping things and forgetting spaces, so it's not actually 100% of people typing that term that are looking for this company. But hey, maybe close enough.

What about someone typing “clearbags protective closure”? Well, that's a product line they carry, and so maybe we could consider that phrase a brand term. People aren't merely searching for the brand, but also a product the brand sells, most likely. But this does raise the question of whether terms that include additional words besides the basic brand should also be considered brand terms.

What if the search is for “clear bags”? The statistics on a keyword like this are somewhere in the middle. The stats aren't as good as the official brand term “clearbags”. Clearly, they're diluted by the fact that some of these people are actually searching for, well, bags that are clear - not the company. So what do we do here? Do we consider this term a 50% brand/50% non-brand term? When we create a report of performance of brand terms vs. non-brand terms, which part of the report do we put this in?

What about “clearbags for candy” versus “clear bags for candy”? Is one searching for products from the brand, while the other is searching for products from anywhere? How many of the “clearbags for candy” searches were people who just dropped the space while typing fast?

If someone searches for “bulk clear bags” do we think they were looking for products from the brand? What about “bulk clearbags”? It's not at all clear, but just based on context, neither of these is likely a search that we should consider branded, despite them having “clearbags” and “clear bags” in them.

Dive into your own preconceptions of what your brand terms are. Search for every variation of a phrase that contained your brand terms. Note how many of those are clearly not people searching for your brand.

This complexity is compounded even further by the fact that “clear bags” also refers to clear tote bags and packpacks that are required at sports venues so security guards can see what is being brought to the game (not something this company sells). Many luxury purse designers also sell “clear bags”. Kate Spade for example. What about a clear toiletry bag?

Many businesses have brands like this with ambiguous meanings and spellings, and considerable overlap with other company products.

This brings us to part two of this point. So far we've only focused on what users search for (Search Terms in Google Ads). We need to also consider what advertisers target (Keywords in Google Ads).

When we target a particular keyword, we're putting in some text, but also some match type that determines how other related search terms could also match our keyword. If we advertise on a broad match of our search term, Google really broadens the scope of what could match. Modified broad keywords will match related search terms in different word orders. Phrase match keywords will match longer phrases that contain our keyword. Exact matches theoretically only match the precise word we put in the system. But that's actually all a lie.

As of late 2019, Google has broadened the definition of every one of these keyword match types. They all match related words or phrases that mean the same thing, or singular and plural variations, or common misspellings. But this all done with some fuzzy machine-learning systems that have studied large datasets to determine what words are synonyms with what other words and phrases.

No matter what keywords you target in your account, you'll match those precise search terms, but also all sorts of related searches. And Google's AI systems make that decision with no human oversight, and countless mistakes. For example, one day years ago, working at ClearBags, I realized that a keyword targeting “clear bags” was being matched to searchers who typed in “acrylic boxes” in Google Search. Why? Apparently, this made perfect sense to the AI. Clear bags are clear containers. So are acrylic boxes. Same thing!

Understanding Competitors Targeting Your Brand Terms

The problem is that these AI systems are not quite as intelligent as they're made out to be. In addition to thinking a box and a bag are the same (or close enough), they can learn that your brand name and a close competitor are actually synonyms. After all, people might search for one and the other in rapid succession. The brands might have closely related descriptions of the industry they're in (like BZ Plumbing, Inc. and EZ Plumbing, Inc.). In theory, Google might be able to learn the products from two companies are basically interchangeable to end users. Are you in an industry where your company was a market leader and people now use your brand name a bit generically to describe that class of products? Google's machine learning systems can't differentiate this. They just learn about the words people use to describe products and then try to give people the search results they want to see.

What this means is that competitors don't even have to explicitly try to match your brand terms in order to have their ads show up when people search for them. When EZ Plumbing places an ad on the exact match keyword “[ez plumbing]” Google may show that ad to people searching for "bz plumbing" because they think it's a synonym, or a misspelling, or for any other reason Google learned the wrong thing.

Another very clear situation goes back to the earlier example of “clearbags protective closure”. When a searcher types a search term that includes both a brand and a product line or characteristic, think about how this matches various advertiser keywords. That search could match someone advertising for the brand term. It could also match any advertiser that was not targeting the brand term, but who was targeting the products without the brand term. If a someone searches for “home depot kitchen cabinets” that is going to match keywords like “home depot” as well as keywords like “kitchen cabinets”. It might also match keywords that Google thinks are related or synonyms like “lowes”, “ace hardware”, “kitchen counters”, or “bathroom cabinets” depending on match types and what mistakes the AI is making this time.

If you want clear evidence of this, and you're not already doing it, set up an ad group targeting your own brand, bid it up so it gets good traffic, and then check the Search Terms report for keywords of each match type to see all the random searches that Google made your ad show up for that weren't what you intended. Now magnify that across the broader economy and consider all the competitors who could be showing ads on your brand term, merely on accident.

But competitors obviously don't just target our brands on accident. For many businesses, buyer journeys are not just one ad click and then a sale. People do general searches, researching different options. Then evaluate other brands. When they're closer to making a purchase, they often search for specific brand names that they're considering in the final phase. A lot of businesses have learned how valuable those searches are, and explicitly target branded searches of competitors. If someone is searching for your exact brand term, they're likely very close to a purchase. Think about it. This is why those brand searches inflate the revenue reports so much.

Those are the most valuable clicks your business gets… and your competitors know it.

The problem with advertising directly to target competitor keywords is that you likely don't have as high a quality score. So your cost per click will be much higher. But given the amount of revenue that comes in from brand term clicks, that may not matter. So what if the clicks cost $5 each if 10% of them result in sales of $500 at 60% margins. At this point, it's just a numbers game. What level of bids are worth it?

Many of your competitors are realizing how valuable it can be to advertise on your brand terms. They don't have to take most of your sales. Just a few percent of your sales can be very profitable for them. And if you're not checking the reports, you won't even realize it happened.

By the way, this article isn't about how to advertise competitively on other company brand terms...but you should be doing that as well (and you might want to start with the people who are abusing you the most).

It's hard to ferret out which competitors are targeting you intentionally, and which are targeting other keywords and Google just happens to send your brand terms into their net as well. But you can very easily see who you're competing against by checking the Auction Insights report for various keywords and ad groups.

In Google Ads, go in to one of your brand-targeting keywords, and click the check box next to it, then click on Auction Insights. This report does not give you full information on all competitors. But it will show you the major competitors that tend to rank highly in the auctions and that frequently have ads which show up for people performing searches which match the keyword you're evaluating.

All of the statistics on this report give you different clues, and I'd invite you to stop and think about what each one means. I won't go into all of the nuances here. If you want a good overview of what's going on, though, look at the Impression Share metric. What percentage of the time do your ads win and get displayed on the screen? Is it 100%? What about the other top contenders? Notice anything odd? It's likely you haven't even seen their ads. That's because Google isn't showing them to you. It has learned that you're not shopping for your company's products and are unlikely to click on ads. But that metric does paint a picture of who else is working on taking your business from you. You may not see the ads, but you've now got a clear picture how often your customers are seeing competitor ads.

Go back and look at the Click Through Rate (CTR) for the keyword you just viewed the Auction Insights report for. These are people searching for your brand. What's your CTR? Is it high? 10%? 20%? What about the other 80% of people? Sure, some clicked your organic links further down the page. Do you think they all clicked your organic links? That would be ridiculous.

Remember, the reason people are advertising on your brand terms (or other keywords that end up matching searches containing your brand terms) is that it makes them money to do so. In order to continue doing this, they need to cover all of their ad costs, and their cost of goods sold. And they're likely making a healthy profit after all of that to cover some of their business overhead and keep a bit at the end of the day. People don't continue to advertise on your brand terms unless they make money doing it. And that should make clear to you that you're losing clicks, conversions, and profitable sales from this.

And don't forget... The Auction Insights report only shows you the top few competitors. It doesn't show you the three hundred other companies that show up less frequently.

“Attackers may sometimes regret bad moves, but it is much worse to forever regret an opportunity you allowed to pass you by.” - Garry Kasparov, Chess Grandmaster

How to Determine the Lift

If you're like most businesses, analyzing competition for an exact match keyword for just your main brand name will show that you have a constellation of other companies showing up on the search results for people searching for your brand. Some may be resellers, so you might not care. Many businesses will notice Amazon on the list. Amazon is Google's largest PPC customer, spending vast sums to siphon traffic away from ecommerce sites and on to their platform. Who else is on the list?

What really matters here is estimating how much of your business these competitors are taking from you. It is deceptively difficult to really find this answer. It's a case of what would have happened if we'd done something differently? There is tremendous variation in the data across time, and competitors are constantly tweaking and tuning things just like you are. There's no way to know everything that's going on with absolute confidence. But we can find some signals to inform our decisions.

This is where the Google Ads Paid & Organic report can help. This report shows data for your whole account, and what happened when a searcher found only a paid ad, only an organic result, or if they reached a search engine result page that had an ad at the top as well as one or more organic listings down below.

Note: The Paid & Organic Report requires that you have linked Google Ads with Google Search Console in order to pull in organic search data. If you don't see any data when you view the report, you need to link these systems.

To get to the Paid & Organic report in Google Ads, click the reports icon in the upper-right, then Predefined Reports, then Basic reports, then Paid & Organic.

Now remember the nuance between what a Keyword is vs. a Search Term? A Keyword is what you are targeting. A Search Term is what the user types. That matters dramatically when you dive-in to this report. If you want to understand what's happening with all user searches that match your brand's exact match keyword, then you need to change your report's rows to include the Keyword and filter appropriately. And remember, that will include data for user searches that Google considers synonyms, misspellings, etc. But if you want to understand what is happening with user searches that are actually for your precise brand term, then you need to run the report for Search Terms and filter appropriately. If you want data on all user searches that include your brand as a word, you can run that report. If you want data on all user searches that include Keywords that include your brand as a word, you can do that. But these are all different data sets with different results. Remember, there actually is no such thing as a brand term. But go ahead and choose whatever definition suits your fancy, and let's dig into the data for that particular scenario.

Here is an example for a Search Term that exactly matches a given company's brand name with some of the key fields you need to look at. Notice that that Search Result Type field has three possible values. This segments the data according to whether the user's search displayed only organic results for the search, or only an ad, or if both showed on the same search engine result page. The two other critically important fields are also on this report. Bear in mind that the CTR field is the click through rate on ads that displayed. The Organic Clicks/Query is the CTR for all of the organic results that displayed on the search engine result page. And note that while CTR is displayed as a percent, Organic Clicks/Query is displayed as a decimal value where a value of 1.0 would equal 100%.

In this example, when only organic results displayed, the combined CTR of all of the organic results on the page was 23%. When only an ad was displayed, the ad got a 40% CTR, approximately. What's really interesting is the situation where both an ad displayed, and organic results displayed down below. When ads show alongside organic results, the ad CTR goes up to about 51%, while the organic CTR drops down to about 18%.

Let's stop to digest this a bit. This type of pattern is common for many companies.

When a user searched for the brand term, but only saw organic results, the combined CTR for all organic results was 23%. Notice that this means 77% of searchers did not click on an organic result for this company. Where did they click? Some didn't click on anything. Some clicked on things like Google Maps or other features like that. Some clicked on competitor organic results. But also, let's be real. Some clicked on competitor ads that displayed above the organic results for this firm.

So what happened when an ad displayed above those organic results that only got a 23% CTR? Well, the organic CTR dropped from 23% to 18%. This company lost 5% of the organic clicks they would have received, because of the ads. That's completely real, and something this company is deeply concerned about. They don't want to shift results from organic to paid and give Google any money they don't need to.

But what else happened? The CTR on ads was about 51%. Let's just subtract out that 5% of CTR that used to go to organic. That drops the marginal CTR of ads down to 46%. They're getting 46% CTR by themselves, plus 5% CTR that they're stealing from organic results. We can think of this as three different CTR rates now. Organic went from 23% to 18% and gave up 5% to paid ads. So maybe we don't want to consider that lost 5% to be part of the actual results of advertising. But, when all is said and done, the ads actually lifted total CTR from people searching on brand terms by 46%. Put another way, without ads, this company got 23% CTR, and with ads included they ramped that up to 18% + 5% + 46% = 74% CTR. They roughly tripled the number of searchers who came to their website after searching for the company's exact brand name.

Note that this was only for people searching for the exact company brand. What about people searching for searches that contain the company's brand name, plus additional words? This is easy to check. Just change your filters. What about keywords targeting the company name? Change your filters. Want to understand the relative number of searches for each result we're seeing? Add in the Impressions column. You can slice and dice this data as many ways as you can imagine to satisfy your own ideas of what a brand search is or isn't, or explore different hypothetical situations that you want to check. Explore!

I want to call out something that a lot of people might find strange. This data set includes a number of times where only an ad displayed, with no organic results at all. Think about that. Remember that what you see for organic search results is not what everyone else sees. Google customizes results for users based on all sorts of hidden factors. This company thinks their organic results rank highly for brand search terms, and they are right. Most of the time they do. But notice that sometimes, for some users, no organic results show at all. And if an ad didn't display for some of those searchers, this company would never have discovered that. Remember, this is for searches on their exact match brand term. When we dig into the data, most of our clients get a significant lift in additional search impressions in addition to more clicks through this effect. Remember that when you think you have the #1 organic listing, that it doesn't always display. The only way for you to influence that is to run ads.

Let's pause here for a reality check. The Paid & Organic result can't actually tell us what would have happened if we had done something else. It only tells us what we see based on the actual decisions we made, in the context of what decisions competitors made, for a given time period. We only know data for the bidding levels we chose, for example. We don't know what would have happened if we'd turned off branded ads. Or if we'd doubled our bids. This report can't paint a picture for us of precisely what we should do. And any actions we take will also influence the actions of competitors in ways we can't predict. So keep it real. The best we can do here is get a rough estimate of what's going on, that might indicate for us if we could make more money by being more aggressive relative to the past, or perhaps more cautious. In order to make solid long-term decisions, this is just one bit of data that helps us steer our decisions, and we need to regularly re-check things and update our decisions based on more recent history.

Is It Worth It?

Is it worth it? Well, that depends entirely on your company's profit margins. And you'll need to run the numbers, considering the value of that traffic (conversion rates and average order values) against the ad cost for the lift in traffic that they wouldn't have otherwise achieved. There is a trade-off here between gross profit margins on additional sales from that traffic weighed against the traffic coming from the paid ads after subtracting out the cannibalization effects of clicks that previously would have come in on organic clicks.

What matters is that there is a balance between these forces, and with some financial thinking mixed with some microeconomics, we can actually evaluate a pretty good trade-off between the forces involved. And this isn't a case of whether it's worth it to advertise on brand terms or not. This is just a balance between the various levels of branded advertising we can engage in, and their impacts on bottom-line profitability.

What I will say is that every time we drill down into the data for a client, we find that it makes sense to advertise on brand terms for them (whether they define that in terms of keyword targeting or in terms of search terms a user types). And as time has progressed, it generally makes more financial sense for our clients to bid even more aggressively, because of how Google is changing keyword match types and because of how more competitors are explicitly targeting their brand terms.

Gone are the days when the #1 organic result showed up at the top of the search engine result page. If you're #1 organically, you're now the #5 result on the page much of the time, behind 4 other search ads, and probably a bunch of Shopping ads as well if you're in ecommerce. To be #1 and recapture all that lost organic traffic, you have to advertise aggressively, even on your own brand terms. If you don't, competitors get that traffic.

Remember, they wouldn't be paying for it if it weren't profitable. And since you have a higher quality score on your brand terms, you could buy that traffic for even less than they can. That traffic would be even more profitable to you.

There is far more analysis that can be done around how to advertise profitably on brand terms and figure out what is going on with the additional traffic you're getting by doing so. This article is just an introduction to the topic.

If you're not already targeting your exact brand keywords, you need to do it. At least bid at a low level so you get the additional reporting opened up to you.

Hopefully this will help you think more clearly about what a brand term really is or isn't. That is one of the largest barriers to people making intelligent decisions around branded search advertising. If you don't understand the difference between what you're targeting and what users are searching for, and the interplay between those concepts, you can't even start to appreciate the nuances here. The world can't be divided cleanly into "brand terms" and "non-brand terms".

Remember that running ads alongside organic results usually gets you more total clicks, even if some of the organic clicks switch over to paid. The higher number of total impressions and clicks are going to drive some additional revenue, and that's what you have to weight against the incremental cost in order to estimate returns from this advertising activity.

The bottom line is that for most ecommerce companies, advertising on brand terms, even exact match brand names, is profitable given the structure of the Google Ads system. These are the cheapest ads for you to run. Your quality scores will be 10 out of 10 across the board, giving you a huge advantage in the auctions. If you don't run them, you save very little money and will give away far more in lost sales to your competitors. Despite the fact that some organic clicks will cost money when you would have previously gotten them for free, the increased lift in valuable traffic and bumping one more competitor off of the search result page will make advertising on these terms worthwhile.

“I’ve seen – both in myself and my competitors – how satisfaction can lead to a lack of vigilance, then to mistakes and missed opportunities.” - Garry Kasparov, Chess Grandmaster



Psyberware specializes in managing online advertising for ecommerce businesses, and nothing else. If you want to build a great relationship with a group of dedicated people who really understand ecommerce, get in touch with us.

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