Branded Search – Thine Friend, Thine Enemy

Once upon a time I didn’t know what “branded search” meant.  I would have assumed it referred to people searching for a particular brand of product like Nike they could buy at a retailer like Amazon; searches like “nike shoes”, not searches like “Amazon”.  Of course, branded search actually refers to your own brand.  “Nike shoes” is a non-branded term, unless you’re Nike.  Who knew.  A bit of a misleading label in my opinion.

The reason I didn’t know what branded search meant was because up to that point my e-commerce experience was from the perspective of a startup.  When you’re doing less than $10 million in revenue, you generally don’t have a “brand”, and certainly don’t think of yourself that way.  Do you buy Google searches for your own site’s name?  Of course you do.  They convert great, don’t cost a lot, and there are few people searching for you anyway.  Life as a non-brand often means doing battle in Google for every order.  If you were to turn off your advertising, your sales would immediately fall to near zero.

For startups and small online businesses, a pie chart of what traffic sources produce orders, looks something like this:

80% Non-Branded Traffic, 20% Branded Traffic

Now that I manage the online business for a very large, very old, publicly traded company with a large number of physical stores across the country, of course this is where I become acquainted with the term “branded search”.  From the perspective of a startup, you always look at the big brands and wonder things like what their conversion rates are like, how they get their traffic and why they’re so successful.  Well kids, having seen what’s behind this curtain I can tell you there’s nothing to be impressed with.

If you ever looked at the Alexa rating of a huge brick and mortar incumbent in your industry and wondered how they get all that traffic, allow me to demystify it for you – almost all their traffic comes effortlessly as a result of being an established brand with physical stores that people drive by and shop at every day.

They don’t know something you don’t.  They’re not raking in orders via social media.  They aren’t crazy good at paid search, and their conversion rate is probably worse than yours.  They get this traffic automatically just because of who they are.  Even the natural search traffic they get is by far more as a result of Google viewing them as a brand rather than the content being fantastic or really well tuned for SEO.  For large multichannel retailers, the pie chart of the traffic sources that produce orders generally looks something like this:

20% Non-Branded Traffic, 80% Branded Traffic

The problem is most big brands aren’t looking at their world that way.  They might list orders by traffic source, which will make it appear that Natural Search and Paid Search are very large buckets of where their business comes from.

When people hear “paid search”, they generally think of all the searches for products, not the searches for your own company’s brand name.  I think many would be shocked to learn just how much of that is really people just looking you up in the white pages.

If you pick up the phone book and go right to the white pages to find “Bob the Plumber”, this means you’ve pretty much already decided to do business with Bob.  Obviously once you connect your call there is going go be a high conversion rate.  If on the other hand you go to the yellow pages and look in the plumbers section, you may call several plumbers before deciding to do business with one.  However if you’re Bob the plumber and that customer didn’t know you, they may have only found out about you from your listing in the yellow pages.  It’s expensive but it can be very effective, which is why you pay for it.

Online, big brands get most of their orders from the white pages (branded search), which is cheap and converts very well.  They are also spending a boat load of money to be in the yellow pages but often don’t realize how much they’re spending to acquire customers there because the paid search dollars are actually spending on both the yellow pages and a double listing in the white pages (buying your own brand name in paid search).  The results are often reported mixed together since it is all paid search spend.  The yellow pages are really expensive and not performing super great but the double listing in the white pages delivers and more than makes up the difference.  Typically marketing reports lump all paid search (branded and non-branded) together so it appears as though paid search is really effective and is a huge driver of your business.  Be mindful that this is what Google wants you to believe (keeps you sending huge gobs of money their way), and also what your agency wants you to believe (it makes their job a lot easier and keeps money flowing their way too).

I consider people searching for your core brand equivalent to direct type-in traffic. Meaning someone searching Google for “kohls” is equivalent to typing kohls.com directly into your browser.  Same intention.  Many people forget to put the .com and the browser performs a search, other people just search for everything.  But the intention behind the act is the same.  So when I say “branded search” I’m referring to both, essentially people who were already looking for you and intended to come straight to you.  And yes I include any branded variants (“kohls clothing”) as well as core brand (“kohls”).  Just because people may believe they’ll be able to navigate your site better using Google doesn’t mean the intention wasn’t to go directly to your site.

For many multichannel retailers, if they had to rely on profitably acquiring new online customers who weren’t already looking for them, they would go bankrupt.  Many multichannel retailers online business doesn’t have real P&L accountability, and many aren’t even using a shadow P&L.  They may fancy themselves as profitable largely because they don’t understand branded traffic.  This seems funny to me that the big brands don’t understand the pros and cons of branded search in online business.  I think it’s because when you experience life without the benefit of branded search, you recognize it right away when you see it, and you can appreciate the benefit, the “unfair advantage” if you will, that it is, and how that built in advantage can blind you from the true effectiveness of the online business.

Why is branded search your enemy?  It’s not, however misunderstanding the big picture can be.  What happens is that the branded search subsidizes the non-branded search.  This makes you misjudge the effectiveness of your paid search campaigns which can cause you to both loose profit and fail to raise revenue.  You loose profit because you mistakenly believe your paid search campaign to be profitable while in reality you may be handing over the lion’s share of your hard earned gross margin to Google, who is more than happy to take it.  It’s a different kind of stupid tax for the rich.  You may loose revenue opportunity because you aren’t able to truly tap into this traffic source to grow the business because you’re not as focused as you should be on making your non-branded campaigns more efficient.

Of course ultimately branded search is how you win.  But the wining is not in the buying of the branded search, it’s in the creating of happy customers that want to buy from you again and cause those people to search for you.  Just don’t confuse the two.

If no-one is searching on your brand and your business is massively dependent on new customer acquisition, you might as well consider yourself an extended employee of Google because all the live long day you’re just working hard to put money in their pockets.  Knowing how to profitably acquire customers in Google is obviously important, but in order to win long term, focus your resources on getting that customer to buy from you again.

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