Should You Bid on Branded Search Terms on Amazon?

When it comes to navigating the online marketplace, making smart choices about advertising can make all the difference. Platforms like Amazon offer opportunities to bid on searches featuring your brand name or invest in well-ranked terms to stay ahead of the competition. In this article, we'll explore these strategies in detail, discussing their benefits and potential pitfalls.

What Is a Branded Search?

When considering branded search terms on Amazon, it's essential to understand that these are Customer Search Terms including your brand name. These terms hold significance for sellers as they directly link a customer's search to your brand. In short:

A branded search is any Customer Search Term (what the customer actually types into Amazon) that includes your brand name.

Defining Branded vs Unbranded Searches

So let’s say we’re Nike, and saw the following terms in our account:

Running shoes
Exercise shirts
Men's soccer jersey small

These are all unbranded searches. They don’t include our or any brand name - it is just the product that the customer wants. We definitely want to bid on these terms because that’s exactly what we sell.

Should you bid on branded search terms?

Alright, let’s dive into a hot topic that splits the room every time: Should you be throwing your hard-earned cash at ads for searches that already include your brand name?

Deciding whether to spend money on ads for your own brand names on Amazon isn't easy. It's like choosing whether to put a sign in front of your shop. You want people to notice you, especially when they're specifically looking for products you sell. But if they're already coming to your shop, do you need a sign that costs you every time someone looks at it?

Think about your customers and how they shop. If they usually come straight to your brand, maybe you don't need to pay extra for ads. But consider the competition too. If other brands are likely to grab your customers before they reach you, those ads could be worth the cost. It's about balancing being seen and not overspending.

Factors Leading to a Successful Branded Search Strategy

A solid strategy starts with knowing who's buying your products and how they find them. Are they loyal shoppers who come looking for you, or are they just browsing and happen to stumble upon your brand? This makes a difference in how you approach your ads. If your customers are loyal, you might not need to spend as much on branded ads.

Then, there's your budget. Think about how much you're willing to spend to stay visible. It's not just about having the biggest sign; it's about having a smart one. You want to make sure your money is going into ads that bring real buyers, not just window shoppers. Compare the costs and benefits, just like you would when deciding on any other business expense.

The Risk of Losing Buyers to Competitors

The online marketplace is crowded, and if you're not at the top of the search results, you might as well be invisible. When someone types in your brand name, you want to be the first thing they see. If not, a competitor could catch their eye first. It's like having your competitor set up shop right in front of yours.

However, think about whether those searching for your brand are really at risk of going to a competitor. If they are typing your brand name directly, they likely want your product specifically. Paying for ads in this case might not be necessary. But if you're in a highly competitive market, those ads could act like a fence, keeping your competitors at bay.

This strategy is called defensive PPC.

What Is Defensive PPC Spend?

This is where you bid on terms that you’re already ranked well for in order to reduce the Traffic & Conversion share that your competitors receive. It’s like an insurance policy against a lower rank.

Defensive PPC Spend Logic

We know that Amazon is not going to reward you just for spending money - you’re just giving them more information.

Information-wise, they don’t appear to just look at the conversion rate - how many people who say your product ultimately bought it. They also seem to look at “conversion share.”

That is, of all the units bought on that SERP, how many of them went to you?

If you’re highly ranked, and you bid on those SERPs, your ad will show up ahead of your organic ranking.

Some people will see your product first and buy it via your sponsored ad, instead of clicking your organic listing.

This cannibalizes your organic sales, at least to some degree.

So, you can turn off your PPC, and your profit will go up significantly (because people buy from your organic listing instead of PPC ad).

The problem with this strategy is that you are giving an opening to your competitors to increase their conversion share.

Hurting Your Ranking

In general, the Quality Score difference between the top few products is pretty small - all of them are great products usually.

If the products are very close to interchangeable, then Amazon will likely use conversion share as a tiebreaker.

If Product A sells more total volume than Product B, it probably makes sense for them to prefer Product A.

If you stop paying for PPC, a lot of people will still buy your product, but not 100%. Even if 95% of people still buy your product, you’re still losing 5% of the conversions compared to what you would have otherwise earned.

Market share is zero-sum, so your loss is your competitors’ gain. Their conversion share goes up, while yours goes down.

Over time, it’s reasonable to think that this would affect your overall quality score, causing your ranking to fall, which hurts your organic sales.

We have unfortunately observed this on our SKUs. We think we’re making a lot more money, then a few months later, our sales are in the tank.

As you can’t generally increase your ranking overnight in a competitive niche, your hard won ranking is now lost and you’re gonna have to fight a protracted battle trying to regain it.

Not fun.

Is Defensive PPC Spend Worth It?

On branded SERPs, we don’t believe it’s worth it because 99% of the sales are gonna go to you, and your competitors will never get ranked up on those SERPs.

On generic SERPs, it’s a judgment call, but in general, we believe that it’s unfortunately the least bad option. You can definitely increase your net profit margins by not doing it, but you’re doing so at the long-term cost of margin.

Maintaining your organic rank on Amazon is immensely valuable. The price of the PPC is not the funnest to pay, but on-net, it’s probably the least bad option to maintain your long-term profitability.

We will definitely defer to you though, if you feel otherwise. Just know that we warn you that in a few months, you might not like the results.

It sucks, but it is what it is, I reckon.

Analyzing the Profit Margin: Bidding vs Organic Clicks

Analyzing the profit margin between bidding on branded search terms and organic clicks provides critical insights for maximizing profitability on Amazon. When you analyze profit margins, consider the cost of bidding on branded search terms versus the potential benefits of organic clicks.

Bidding on branded search terms may lead to increased visibility but at a cost. If organic clicks are already driving significant traffic and sales, the additional expense of bidding mightn't be justified. It's essential to weigh the potential return on investment against the expenditure on bidding.

Look at your sales before and after the ads. If you see a clear increase in sales that can be directly tied to the ads, they might be worth it. But if your sales stay the same, that money might be better spent elsewhere. Remember, every dollar spent on ads should be a dollar that helps grow your business.

The Misconception of Automatic Profit from Branded Searches

It's common to think that ads with your brand name always lead to more money. But it's not always that simple.

Imagine every time someone searches for your product by name, you're paying for them to find you, even though they were looking for you in the first place. It's a bit like giving someone directions to your house when they're already at your doorstep. You might be spending money on something that would happen anyway.

Many sellers see their ads doing well and think this means they're making more sales. But it's crucial to look deeper. Are these sales you would have gotten even without the ad? It's essential to separate the impact of your ads from the natural sales flow. If your customers are loyal and specifically searching for your brand, they might not need an ad to find you. This is about understanding the true value of your ads and ensuring they're genuinely adding to your sales, not just adding to your costs.

Why ACoS Looks Good But Might Mislead

Advertising Cost of Sale (ACoS) can sometimes paint a misleading picture. A low ACoS might seem great, suggesting your ads are efficient. However, if these sales would have happened without the ads, you're not actually boosting your profits; you're just shifting them from organic sales to paid ones. This doesn't necessarily grow your business; it just changes how the numbers look.

It's crucial to dig into these metrics and understand what they really tell you. Are you seeing genuine growth, or are your ad dollars just moving sales from one column to another? This kind of analysis can reveal whether your advertising strategy is working or if it's time for a change. It's not just about the immediate numbers; it's about the long-term health and growth of your brand.

Identifying False Positives in Advertising Reports

Let's discuss how sometimes what seems like advertising success could be misleading. You may believe your ads are driving sales, but if those customers were already on their way to purchasing from you, then your advertising budget might not be as effective as you think. Here's how to ensure every dollar you spend contributes meaningfully:

Regular Reviews: Consistently check your sales and advertising reports side by side. Don't look at them in isolation because the real story lies in their relationship.
Spotting Trends: Look for clear patterns, such as a genuine increase in sales that directly lines up with your ad campaigns. This indicates your ads are probably working as intended.
Correlating Sales with Ads: Identify whether there is a direct link between ad spend and new sales. If you can't find a connection, it might be time to rethink your strategy.
Avoiding Assumptions: Don't automatically attribute all sales to your advertising efforts, especially if there's a chance those sales would have occurred anyway.
Actionable Insights: Use the data to make informed decisions. If your advertising isn't bringing in new customers, consider adjusting your campaigns or reallocating your budget.

By adopting these steps, you can avoid the common trap of misinterpreting your advertising success and ensure your strategies lead to genuine growth and not just inflated metrics.

Strategies to Protect Your Brand Without Overspending

Protecting your brand on Amazon is crucial, but it doesn't mean you have to spend a fortune on ads. It’s about being smart and targeted with your advertising efforts, ensuring that you get the maximum benefit from every dollar spent.

Setting Up Your Product Pages for Organic Discoverability

Maximizing organic discoverability for your product pages requires strategic optimization techniques to safeguard your brand's visibility without excessive expenditure.

You have to make sure your product pages are optimized. This means:

Optimize Product Titles: Ensure your titles contain relevant keywords for the algorithm to recognize your products.
Utilize Descriptive Bullet Points: Clearly outline product features and benefits to enhance visibility.
High-Quality Images: Use captivating visuals to attract customers and improve click-through rates.
Encourage Customer Reviews: Positive reviews can boost your product's credibility and ranking on Amazon's search results.

We have a full guide on optimizing your product listings here.

Keeping an Eye on Competitor Tactics and Category Trends

To strategically safeguard your brand's visibility on Amazon, it's critical to monitor competitor tactics and category trends in order to protect your brand without unnecessary spending.

By staying vigilant on marketing strategies employed by competitors and analyzing sales analytics, you can defend your brand effectively. Keeping a close eye on competitor movements and category trends allows you to adjust your marketing approach accordingly, ensuring that you remain competitive in the marketplace.

Utilizing analytics to track competitor behavior and sales performance enables you to make informed decisions to enhance your brand's presence without overspending. Understanding your competitors' actions and the overall market landscape empowers you to make strategic moves that positively impact your brand's performance on Amazon.

How to Decide on the Right Move for Your Brand

We believe that every action we take on Amazon should deliver us more profit compared to not taking that action.

And whenever we take an action on Amazon, we’re de-facto saying:

This will make me more money compared to all my alternative actions.

So, for us to be correct in bidding on branded search, there MUST be a connection between that action and us making more profit.

When Bidding on Branded Search is the CORRECT Action

Bidding on branded search would clearly be the right move if:

The customer can be easily swayed to a competitor product
We aren’t actually ranked up on our branded search
The lifetime value of a marginal customer is incredibly high

In these scenarios, we want to get our ad in front of the customer because if we don’t, we won’t get the sale, which will have other deleterious effects.

It is likely the case that we’re gonna make more profit by bidding on the terms compared to not bidding on the terms. Ipso facto, we should bid on the terms.

When Bidding on Branded Search is the WRONG Action

I think that bidding on branded search would clearly be the wrong move if:

The customer would have bought our product anyways

If we knew for certain that the customer was gonna find, click on, and ultimately buy our product no matter what, then we’d be foolish to bid on that search right?

We’d just be donating money to Amazon for a click that we would have gotten organically anyways.

We Believe That Almost Universally, It’s the Wrong Move to Bid on Branded Search

It’s our current belief that unless there are extenuating circumstances, the right move is for you to not bid on your branded searches. Here is a minor result from one of our products back in the day before we negged out our brands across our portfolio:

Yes, the ACoS's look amazing, but that isn’t real profit. It’s real loss. We would have almost certainly received those clicks and sales even if we hadn’t bid.

Our ad just appeared before our organic listing, so the customer, not knowing any better, clicked our sponsored ad, costing us money for no benefit.

It’s true that you’ll lose some sales to competitors, but your total net profit (the thing that actually matters) will go up.

From our experience, most clients notice almost no drop in sales once they turn off bidding on these branded searches. But they do notice the extra profit.

What About Defending Our Brand?

This is definitely a very reasonable question and concern. I’d offer you the following:

Defending your brand on branded Customer Search Terms only makes sense if its gonna earn you more net profitsome text
1. If you don’t actually make more profit from this action, then why do it?
The customer that can be swayed from buying your product after searching your brand name, is likely not a very valuable customer in the first placesome text
1. The Lifetime Customer Value of these folks is likely to be low as they have self-identified to be not very loyal
Your branded SERPs are gonna be almost exclusively packed with your products, so long as your listings are set up correctlysome text
1. There is no need to spend money to rank on these SERPssome text
  1. You’ll do it naturally
  2. They can find your product easily by just scrolling down a bit
You don’t have a way to upsell or capture the customer’s email (most likely), so the Lifetime Customer Value is going to be limited for 99% of productssome text
1. If there was a way to do upsells or market directly to these people, then the math might change.

Basically, we believe that it’s going to be VERY hard to justify spending a bunch of profit to capture a small extra sliver of the market, given the nature of that customer.

Conclusion

In conclusion, the decision to bid on branded search terms on Amazon should be guided by a clear understanding of your brand's specific situation and a careful assessment of the potential return on investment. If bidding on branded searches means diverting resources from more profitable actions, it may not be the right move for your brand. Consider the scenarios carefully: Bid on branded terms if it directly contributes to your profit by protecting sales from competitors, enhancing your visibility for high-value customers, or addressing a gap in your organic search rankings.

However, if your analysis suggests that customers loyal to your brand will find and purchase your products without the need for paid ads, then investing in branded search may not be the most efficient use of your resources. Remember, the ultimate goal is to enhance your net profit, not just to increase sales at any cost. Strive for a balanced approach that maximizes profitability while protecting and building your brand's presence on Amazon.

‍