Rakuten Marketing Blog

Managing Branded Cost-per-Click Inflation

Posted on Tue, Sep 22, 2015 @ 09:09 AM by Sarah Martin

I currently manage AdWords accounts for a variety of advertiser brands that are either commonly re-sold in larger department stores and/or through online-only marketplaces.  While wholesalers and resellers can certainly benefit a business holistically, they can also directly affect the AdWords competitive landscape… and ultimately your paid search program’s ROI. 

201509-RS-Blog-Managing-Branded-CPCAs we all know, actual cost-per-click (CPC) is a direct result of a real-time auction. Google tells us that our Ad Rank is based on two things: Quality Score & max CPC bid.  Ideally if you are the trademark owner, your branded terms will inherently carry a high quality score and you will be actively bidding to achieve top positioning on the SERP (Brand Terms Are Valuable!).  In my experience, CPCs for a brand’s top exact match branded terms should ideally be less than $0.10. While this is what I would deem as “acceptable”, there are many occasions where I find myself dealing with CPCs that are significantly higher than that.

Because Google’s algorithm is auction-based, at some point the most influential variables are the bids that are being entered into it. Google tells us that in order to achieve the best ad positioning at the lowest price (in other words, earn a high “Ad Rank”), you should work to improve your Quality Score; however the opportunities for optimizing your Quality Score are limited.  You can only do so much to improve it before you either (1) have attained the coveted “10” or (2) have to attempt to make up for it with your bid. And in this paradigm is where we find the issue of CPC inflation.

One day your top branded term’s CPC is $0.10, and the next you’re suddenly paying $0.27 because another advertiser decided that they wanted to bid a ridiculous amount for the same term. Overnight your branded spend skyrockets and your ROI drops in half… all because the reseller/wholesaler that’s supposed to be helping you grow your revenue is now in actuality costing you money. So what is the best way to ensure that everyone plays nice in the space?

  • Consistently review Auction Insights Reports. These reports, found in the AdWords interface, are tremendously insightful with respect to who is bidding in the space. Check out the “Top of Page Rate” column to assess how aggressively each advertiser is bidding. As discussed above, this is the variable that can be most detrimental to the return on your marketing dollars. Monitor these reports often so that you have a working knowledge of how other advertisers’ presence can directly affect your program’s KPIs.
  • Work directly with your reseller and wholesaler partners. Develop a working relationship with your business partners’ decision makers and marketing managers. Chances are they would be happy to pay less for the same traffic, too.
  • Implement rules & guidelines to protect your most valuable terms. Contractually establish bidding & trademark regulations with all partners.  Not only is it important to maintain brand integrity, but it is equally as important to protect your marketing budget, as well. I don’t think anyone is on board with paying $4 at the pump, when it’s possible to pay $1.99.
Sarah Martin, Senior SEM Specialist

Sarah Martin
Senior SEM Specialist
Rakuten Search

The Rakuten Search team provides Free Adwords Account Audits, that focus on uncovering the potential for more revenue, a higher ROI, or increased conversion rates. We've helped advertisers deliver millions of dollars in additional revenue through these audits. How much can we discover for you? Find out for yourself, it's completely free – the only investment is granting us temporary access to your AdWords Account (to perform the audit) and your time (to present the audit's findings). Click on the banner below, or here to get started! 


Tags: ROI, quality score, resellers, google, PPC, adwords, cpc, google adwords,, wholesellers, brand terms, serp

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