3 Reasons to Bid on Branded Keywords:

1.  A lot of other companies have had success with it: In Online Marketing Heros, Jeffrey Glueck from Travelocity stated “We found, and many other large e-commerce players have found, when they deconstructed the data, that 3/4 or more of their profit were coming from people typing in the company’s brand name into the search engine”.
2.  People might search branded keywords because they remember your product from another advertisement: In a TMP Directional Marketing report, it stated that approximately 70% of users will not remember a URL that they saw on television, but they might be likely to see an ad and remember the company name or product.
3.  Branded Keywords are searched frequently: According to a study conducted by Yahoo in 2007, 24% of searches that occur online are navigational in nature which means that users are looking for a specific site, or brand name.

Is it Useless to bid on Branded Keywords if I already appear in the Organic Results?

Although it’s important to make sure you show up in the sponsored section, a lot of people think it’s a waste of money if your site ranks well for branded keywords in the organic listings.  Young-Bean Song states in an article published by AdWeek in 2007 “The reality is those people are already intending to go to your Web site. What you’re really paying for is a glorified Yellow Pages listing.”

Although sponsored ads do not get clicked on as much as organic listings (as shown in the graphic below), Neilson NetRatings has found that users tend to spend 40% more time on the sponsored ads than they do on organic listings.

Where People Click on Google

Although Advertising Age didn’t have the same findings, their chart does indicate that visitors that click on Sponsored ads tend to have a lower bounce rate and therefore may be more interested in the content found on the website.

Advertising Age - Comparing Sponsored and Natural Search Results

Based on all the findings, The Best Results seems to come when Websites appear in the paid and organic section.  In March 2007, a study by Media Post Search Insider, indicated that a listing found both in the paid and organic listings on the same term resulted in an increase in clicks and post-click activity.  Enquiro Research did a similar study in 2007 and came up the results indicated in the graphic listed here.

Enquiro Research, 2007

Branded Keywords may not give you as many conversions as you’d think:

Although it is clear that bidding on branded keywords is probably a good idea, just how much attention should you put towards the brand-specific keywords?
In his book “Online Marketing Heros” Michael Miller states, “Don’t assume that every link you get from a search engine is attributable to the search engine itself; anyone typing in your brand name probably heard about you from a different medium, and the search engine shouldn’t receive full credit”.

According to an article that

Adam Goldberg

wrote in Search Engine Strategies (Volume 2, Issue 5), users are not actively searching a specific brand at the start of the buying cycle.  Instead, they first search for your product or service.  During these searches, they will establish which brands they prefer.  After that point, they will do searches for the specific brand they chose.  Adam Goldberg points out that too many advertisers today give a lot of credit to their “branded keywords” and assume that these keywords are the ones that are providing them the best ROI.  Adam’s suggestion is to break your keywords down into 3 categories: introducers, influencers, and closers.  Since branded keywords fall into the “closers” category, it’s important to make sure you have keywords that fit into the other 2 categories as well.

Offermatica also found that a campaign that has a mix of general search terms and branded search terms, tends to generate a 23% higher conversion volume and a 22% higher average revenue per visitor when compared to a campaign that does not include branded keywords.