It seems to me that Google has got what it wanted when it comes to allowing bidding on competitor brand terms.
For the IPA Search Group, of which iCrossing’s Arjo Ghosh is chair, has released statistics showing that CPCs on brand terms have shot from 6p to 29p.
The study – from the figures of 12 agencies (representing 47 brands) – demonstrate the unsurprising impact in the cost of PPC advertising on brand terms now that competitor bidding has been allowed. Quite simply, with more competition, clients have to spend more to show top for their own brand. This is a clear route to more revenues for Google.
However, the study also shows that click-through rates on brand terms have dropped significantly (from 40% to 20%). Google could argue this statistic demonstrates the value of the shift for users, since it suggests that, when given the choice, users do click on competitors’ ads, even if they are expressly searching for another brand.
In a nutshell, Google has what it was after: a new route to prop up declining PPC growth and backing for its argument that this new route is good for users. That the two are inextricably linked is at the heart of the genius of Google and AdWords, even if that link is a constant source of frustration for brand-owners.
Paul Doleman has written about the changes on Google’s Trademark which can be found here.
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June 17th, 2009 at 2:26 pm
None of this is really surprising but the only people who are upset about this are advertisers and not the people who really matter – the users. They want alternatives and choice – Google has provided it (to their own advantage admittedly) so the real question here is, is your product/marketing mix good enough to compete with your competitors and win back those customers potentially going walkabout?
July 1st, 2009 at 12:26 pm
Your article seems to indicate that it is a level playing field for the brand owners, and competitors.
It definitely is NOT.
I have seen the estimated CPCs for someone bidding on a particular competitors name and it is SCARY!
(This will vary from company to company obviously).
July 1st, 2009 at 12:57 pm
Hi Jordan,
Not at all. You’d expect competitors to pay higher CPCs for another brand’s terms wouldn’t you?
I’m just saying that higher CPCs and lower click-through rates will be just what Google expected/hoped for.
Best,