Why is it important to bid on your branded keywords? Well, because this is where you close those customers who are ready to convert! However, if you experience increasing CPCs that negatively impact your ROAS or CPA, you might want to test reducing bids on those high-value keywords.

Why you should bid on branded keywords

1. Competition

If your branded ad does not show for a branded search, competitors’ ads could be at the top of the search results page just waiting to snag your potential customers.

2. Performance

In general, performance suffers when you turn off brand keywords. Throughout the years, case studies have shown that ads on brand terms drive incremental clicks and produce a synergy with organic listings.

3. Adaptable messaging

You can quickly and easily update your branded ad language based on promotions, new branding pushes, etc. without changing your site (as you would have to do for organic copy changes).

4. Strong branded presence = trust

Especially if you do not have the top organic listing, it is important for potential customers to see that you have invested in your own success by promoting yourself. This leads to brand trust.

Why you should test bidding branded keywords down into a lower ad position

1. Low competition & rising CPCs

If you don’t see too much competition for your branded keywords but are still seeing rising CPCs, you are not alone! Nearly all advertisers see some increase in CPCs year-over-year, even without increases in competition. That said, even a small increase in competition from a large, well-known company can impact CPCs and cause them to increase. Since competition isn’t impacting your ads heavily, reducing your brand keyword bids could lead to lower CPCs and higher ROAS.

2. “Competition” from resellers and partners

Competition that drives up your CPCs year-over-year could be coming from your resellers or partners. They are a valuable part of your business, and you don’t want to get into a bidding war, so what do you do? Reducing brand keyword bids can lower CPCs for both you and your partners, leading to stronger ROAS all around. In this case, you are still getting revenue driven through your partners.

Consider all the effects this test might have on your site revenue

1. Other channel revenue/lead increases

With a reduction in branded spend, you would also expect lower click volume to the site through those ads and overall lower revenue. However, if this loss is partially compensated by other channels (organic, direct, resellers/partners), then it can sometimes be worth the lower amount of traffic for a more efficient ROAS.

2. Monitor competitor traffic

If you have been enjoying minimal competition on your brand keywords, congratulations! However, if you run a branded bid reduction test, you should monitor potential spikes in competition to make sure your organic listing is still the first thing a searcher sees.

3. Shopping

You will most likely only want to test bid reduction in search campaigns, not shopping campaigns. Shopping tends to yield more competition, especially as more and more traffic has shifted to shopping ads.

4. Apples to apples comparison

Look at comparable data sets to see how traffic, conversions, and ROAS or CPA change during your test. This will help you determine whether to keep your bids lowered or raise them back up.

The test in action

1. Decide how to split your traffic

Pick similar time periods based on seasonality & how much traffic you get – consider using a Google Ads experiment.

2. Bid down your branded keywords

How much you bid them down is up to you – even moving from position 1.0 to position 1.2 can have a significant impact on CPCs. Bid reductions of 10 to 20 percent might only decrease your impression share from 99.6% to 99.1% and still provide cost savings.

3. Let your test run for a specified period and monitor closely

At the end of the test period, review the results based on direct data and the considerations above. Also, look at your overall revenue and Google Analytics data as another check.

The results

Below are some results from a brand bid-down test that we ran:

While brand spend is an essential aspect of every account, there are times that reducing brand bids can produce greater efficiency. In this case, the test results show relatively flat revenue at a 38% higher ROAS using lower bids. This is a clear win for efficiency in the account. In addition, this cost savings also allowed us to invest more budget in top of funnel growth initiatives.

If you’re looking for a partner to help you run new tests in your account, contact our team.