On May 5 last year, Google liberalised its policy on competitive brand bidding – allowing any brand to bid for search traffic generated by a competitor’s brand terms.
Harvest Digital has conducted a first round of research across 100 leading brands in all major sectors looking at searches on the key brand term, and the results point to a highly polarised position between different sectors.
Sectors such as technology and telecoms saw little or no competitive brand bidding on Google Adwords. Commonly, the brand was not even bidding on its own brand term. However, two sectors – finance and travel – were very much the exception as shown in the table below.
For the second stage of research, the travel and finance sectors were closely examined to find out why there was so much competitive activity and who seems to be benefiting.
The review of the finance sector looked at search activity on 50 major brands split into key categories. The level of competitive activity was immediately obvious, with 85% of all the searches conducted by Harvest Digital showing the brand owner bidding on their own brand term. In terms of competitor activity, there was an average of three-and-a-half competitor ads on each brand search.
Insurance and credit cards are the most competitive categories, yet by contrast, a major banking brand like HSBC shows no competitive activity on Google Adwords at all.
Some brands seem surprisingly reluctant to bid on their own brand terms, for instance less than half of loan companies are bidding on their own brands. On the other hand, aggregator sites are quite aggressively targeting these brand terms.
Of course, aggregator sites are in one sense an important partner and sales channel for financial brands. But they can also act as a false friend, bidding up the cost of brand terms for the brand itself.
Aggregators are bidding on brands that are not in their comparison panel, even in the case of Direct Line, which has made a very public stance against them. A search on Google for Direct Line brings up a cheeky ad from Money Supermarket: “Price comparison sites not as cheap as going direct? Why not find out for yourself?”While there are sometimes up to five or six aggregator ads appearing against a branded search, ironically aggregator sites will often not bother to bid on their own brand term.
Affiliates play a useful role for brands in helping them to dominate the first page of Google listings and to some extent reduce the impact of aggregator sites.
For instance, a search on Tesco Insurance showed four or five affiliate partners on the first search results page, whereas a search for Norwich Union insurance showed no affiliate ads but eight ads from competitors.
Four major high street banks – HSBC, Barclays, Natwest and Lloyds TSB – had no paid searches showing at all. The credit crunch cannot be the only reason for this and there is a suspicion that informal agreements may be in place to keep the bidding landscape in check.
Travel is a relative oasis of calm compared with the finance sector, although 70% of brand searches saw some degree of competitive bidding. One key difference is that in travel, the norm is for affiliates not to be allowed to bid on key brands, which is perhaps a reflection of the generally tight margins in the sector.
We surveyed 26 well-known travel brands including aggregators (Cheapflights, Travel Supermarket), tour/holiday operators (My Travel, Thompson), booking sites (Opodo, Expedia) and airlines (Ryanair, BA).
Of these, about 85% were bidding on their own brands although notable exceptions included Ryanair, easyJet, Thomas Cook and First Choice. Airlines in particular seem to be unengaged in search, with many not bidding on their own terms or on key competitors.
By contrast, Cheapflights suffers from the highest level of competitive bidding with 11 ads on the first page – its own plus ten competitors. Because the term “cheap flights” is not trademark protected, competitive brands can legitimately use it in their ad text, increasing click-through rates and hence bringing cost-per-click down.
When Google relaxed the rules on brand bidding, it argued that this was a way to increase customer choice and allow healthy competition between brands. Unfortunately, Google is turning a blind eye to the widespread practice of manipulating URLs to include a brand being targeted by a competitor. For instance, the official domain for Sheila’s Wheels is www.sheilaswheels.com. But Google will allow a domain like sheilaswheels.uknetguide.co.uk, which to an unwary consumer may appear more prominent than the official website.
While Google may be happy with a tactic like this, the courts may be less relaxed – as the current action by Interflora against Marks & Spencer over trademark bidding on Google suggests.
Mike Teasdale, planning director at Harvest Digital, contributed to this week’s Trends Insight