Branded Keywords are SEM-sational!

Research released recently by Atlas, a unit of Microsoft, indicates that bidding for so-called “branded” keywords is a waste of a search marketer’s precious budget. This research, however, is wrong.

Before explaining why I can so confidently state this, let’s take a look at Atlas’s findings, based on 30 search ad campaigns with a reach of 120,000 users on Google, Yahoo!, and Microsoft.

From what I can glean, the only “finding” was that 60 percent of visits to these campaigns came from branded keywords, while just 29 percent came from first-time visitors who searched on generic terms. The other 11 percent, presumably, came from return visitors who came through generic searches. And, for the record, a “branded” keyword here is defined as a company’s name or products, and associated misspellings or typos.

The study then estimates that such branded keywords typically eat up about half of the search budget for these campaigns. As a marketer who has spent my fair share of time collecting one- and three- and twelve-cent branded clicks, I find this tough to believe, but I’ll take it on faith.

The conclusion, then, comes from Atlas’s Vice President of Analytics, Young-Bean Song, who said, “The reality is that [branded searchers] are already intending to go to your Web site. What you’re really paying for is a glorified Yellow Pages listing.” (Quoted in AdWeek)

While the first part of the statement is generally the case on a branded search, the second part wholly underestimates the value of a well-written ad and the way that paid and organic listings work together.

In the same way that a well-constructed search marketing campaign will de-emphasize keywords for which the company positions well, allowing the organic listing to drive the revenue in those situations, a well-constructed branded campaign will emphasize different aspects of a product line that may not be available in a company’s natural listing.

A natural listing for a company name is generally a billboard, the “Yellow Pages listing” that Song referred to, a general summary of a company’s product line or target market. A strong paid listing should emphasize a different aspect of the company, preferably a high-margin offering or an add-on that might not normally be associated with the company. It should also, of course, feature that all-important call to action to better drive conversions.

Search marketers should track these branded terms as they do with any key-converting keyword in their campaign. Which language drives conversion rate? More importantly, perhaps, which language drives average order size?

The study also ignores paid search’s value as a branding tool. Building customer trust is a constant battle, made easier when a well-targeted ad leads a user to a well-designed site displaying the information or products that were promised in the ad. While that user won’t necessarily make a purchase as a first-time visitor, a good site experience is more likely to cause that user to have positive associations with that company. Those positive vibrations bring on a branded search, a branded click, and voila, a new customer. In the “last click wins” world of web analytics, this user is credited as a branded sale. Were it not for their initial, generic search, they’d have never been a customer at all.

Now, Atlas’s study may represent a difference in scope. I sense that the report focused on a few behemoths – the Nikes, the United Airlines – mega-corporations whose names are known and who may draw a far larger percentage of clicks than an internet-only or catalog-based distributor only starting to build brand familiarity. (That is, the term Nike probably draws far more searches, advertisers, and clicks than the term “Acme Widgets.”) It is highly possible that, in these cases, the cost, competitiveness, and volume of branded searches might outweigh the benefit in terms of converting new customers. These mega-corporations are also the exception – it’s called the Fortune 500 because there are only 500 of them, after all.

In the case of a small, building company, however, there’s never an excuse to avoid advertising on branded terms. Three-cent clicks are awesome.