Branded search: bidding on own and competitor's brand name

Branded search: a waste of money?

Bidding on your own brand name is often referred to by SME entrepreneurs as a waste of money. On our own brand name we are already at the top organically (unpaid) so why should we pay to be there? But what if a competitor also bids on your brand name? What do you do then?

On the other hand, there are business owners who see advertising on the competitor's brand name as a clever trick to poach customers. But does it really work that way? And what are the consequences?

In short, what is smart to do when it comes to branded search? This article takes a closer look at it.

Types of search results and search terms

Search Results

Those who type in a search term on Google, Bing or Yahoo get 2 types of search results: ads and organic results.

Search Terms

There are 2 types of search terms: branded and non-branded - or generic - search terms. Branded keywords contain a brand name such as "miele oven," "apple" or "tasmanic. Those who search on these are already familiar with the company and are specifically looking for products or services from this company.

Generic keywords do not include a company name, such as "cell phone comparison," "steam oven" or "marketing agency.

This article is about branded search: the combination of branded search terms in Google (or Microsoft) ads. It can be either your own or a competitor's brand name.

Branded Search. Bidding on your own brand name, do it?

To get extra control over what someone sees in search results when they search on your brand name, you can bid on your own brand name in Google Ads or Dutch Microsoft Ads Agency. But why would you do this? You're already at the top organically, right?

Organic #1 ranking not enough

Google and other search engines want to show the most relevant search results possible. So in a branded search on, say, "Stella bike," Google will organically place the Stella brand at the top (unless Stella is really doing something wrong). But Google allows advertisers to use someone else's brand name as a search term in Google Ads. These Google Ads ads appear above the organic results. If Stella does not advertise on its own brand name, someone searching on "Stella" will potentially see a competitor first and then Stella's organic result. It can be even worse if there are multiple competitors advertising on 'stella' as a keyword and thus multiple ads will appear above the first result of Stella itself. It is therefore crucial for Stella to advertise itself on the keyword 'stella' and related search terms in order to really be at the top.

Offer benefits on own brand name

• By advertising on your own brand name, you protect your No. 1 position in Google/Bing. You push others "down" in search results.
• You drive up costs for a competitor who also wants to advertise on your brand name.
• Google Ads and Dutch Microsoft Ads Agency can be tailored to a specific message or action that catches the attention of potential customers.

Possible objections to bidding on own brand name

• Higher advertising costs.
• Ads reach searchers who would have come to your website anyway.

Branded Search. Bidding on branded competitor, do it?

To come to the attention of potential new customers, in addition to advertising on generic search terms, you can also advertise on competitors' brand names. After all, someone looking for a competitor might also want to consider you as a supplier.

Branded search volume & cost per click as a factor

A well-known brand often has a lot of branded search. For example, 'apple' alone is searched 199,000 times per month in the Netherlands, 'iphone' 104,000 times. For example, 'cell phone' is only searched 17,000 times per month. So, as a new cell phone provider, you could reach a larger group by advertising on "iphone" than on "cell phone. In addition, you have the price you pay for clicks, the CPCs. For 'cell phone' you pay on average $2.00 per click, for 'apple' $0.15 and for 'iphone' $1.00. I n this case, therefore, it is a lot cheaper to advertise on the competitor's brand and/or product name.

Possible objections to bidding on competitor's brand name

• You may have ethical concerns about this.
• The quality score of your campaigns drops, your ads with this keyword are less relevant than those of the brand itself.
• You have to pay more to score on someone else's brand name.
• You also already have to advertise on your own brand and/or product name and that too costs extra money.

Bidding on brand names in Google Ads: what is allowed?

This is not allowed: brand name competitor in ad text

Google is clear about what is and is not allowed when advertising on a competitor's brand name. What is not allowed: mentioning the competitor's brand name in the ad text. There should be no confusion about who the advertiser is. Google (often) disapproves such an ad and may even suspend the advertiser. If a competitor advertises with your brand name in their ad, you can file a complaint with Google Ads.

This is allowed: brand name competitor as keyword

What is allowed: using a competitor's brand name as a keyword in a Google Ads campaign. The result: your ad appears when people search for the competitor's brand name. Google does not have to inform the competitor about this and you can, in principle, advertise with this search term unhindered.

By the way, it is possible that a DSA or Shopping campaign in Google Ads, for example, will automatically bid on a competitor's brand name. So it does not always happen in a planned way.

What is a prisoner's dilemma?

The prisoner's dilemma is a thought experiment from mathematical game theory in which it is shown that the best outcome for both together is not always achievable if it cannot be communicated. Further down, you'll read how this applies to branded search.

The classic prisoner's dilemma goes like this:

Suppose a serious crime is committed. Two armed men are arrested. It seems they are the perpetrators, but there is no evidence. They are each in separate cells and cannot speak to each other. The prosecution makes the same offer to both suspects:

1. If both suspects remain silent, there is no case. They will be fined only for unlicensed possession of firearms.
2. If one confesses, the case is closed. The one who confesses first goes free because he cooperates. Those who don't confess get at least 10 years.
3. If they both confess, they get five years each.

What is best for a suspect to do (optimal strategy)? Remain silent and show solidarity (cooperative strategy) or confess and choose for himself (non-cooperative strategy).

The dilemma is: both suspects are better off remaining silent, but each is also thinking of his own benefit. They cannot confer. Whatever the other does, it is better for each suspect to confess. Because if the other is silent, confessing offers the greatest benefit (acquittal instead of a fine). If the other confesses, confessing oneself also provides the greatest benefit (5 years' jail time instead of 10 years).
Even if the defendants agree in advance to remain silent, it is advantageous to betray the other and confess. Below is the thinking of both:

But why is this relevant to branded search?

If you change silent in the table above by "does not advertise," and brooks by "does advertise," then you have the situation for branded search of two competitors. The situation where both parties do not advertise is optimal because neither incurs additional costs. But if one of the companies is going to advertise (confess) it is detrimental to the other. It often ends up then that both do advertise. Google and Microsoft are happy because more is advertised and the click price goes up.

Unequal relationships & interests between brands

The classic prisoners' dilemma is an extreme simplification of reality. In the world of business, there are always more than 2 players involved and they also have unequal interests. Models such as the multiplayer and repeated prisoners dilemma have been developed in game theory for this as well. We will leave those for now, so as not to complicate things unnecessarily. What is important to note is that the interests of the parties are not equal. This leads to a situation where one of the players will choose the non-cooperative strategy (confess).

Branded search volume & cost per click as a factor

Not every brand is equally well known and therefore not every brand name is searched for equally. In addition, the cost per click (CPC) for clicks on branded searches is often a lot lower than on generic search terms. Therefore, an unknown brand has more interest in advertising on the brand name of a larger competitor.

For a large and small company, the schedule looks like this:

Branded search: what to do?

It is difficult for SME entrepreneurs to make choices regarding branded search. Here is some advice.

• Look at the search volumes on the brand name of your competitors and yourself: what is your position?
• Are you the brand with the highest search volume: always advertise on your own brand name.
• You really don't want to advertise in your own name? Then make sure you get a notification when a competitor starts advertising on your name.
• If you are the brand with one of the lowest smallest branded search volumes: advertise on the brand name of your biggest competitors. This will make your brand better known among category buyers (buyers of your type of products).