Google Ads: Should You Bid on Your Own Keywords?

Many of my blog posts focus on pointing out issues with specific ad platforms or ad formats. My goal is to educate readers about their downsides and risks. I want to give advertisers the knowledge I have. If you've been reading my blog for a while, you might think I focus a lot on the negatives. I get where you're coming from. The main reasons I often talk about the downsides are: 1. A lot of other bloggers already talk about the good parts, so I don't want to repeat what's already out there, and 2. Ad platforms are really good at promoting themselves, so they don't need me to do it for them.

I think my job here is to talk about things most advertisers don't. I want to help you save money on bad ads and help you make more money from the good ones. Now, to the main point: Is it a good idea to pay for ads that pop up when people search for your own business? If you're already going to show up at the top of the search results for your business name, should you still pay for ads?

Let's dive into it.

If you don't know about Google search ads, they were one of Google's first ad tools. These ads let businesses show up at the top of certain search results on Google. You pay each time someone clicks on your ad. To put it simply, it's like a regular search result on Google but has "sponsored" written next to it and shows up right at the top. Even though Google now has many different ways to advertise, Google search ads are still their biggest money-maker. This is because these ads show up based on what people are looking for right then and there. It means businesses can show their ads to people who are right in the middle of looking for what they sell. So, what's the big deal?

You can use Google search ads in two main ways. First, you can show your ads to people who've never heard of you. Like if you sell shoes, you can target common words like "shoes" or "sports shoes." The second way is to make sure you also show up in the sponsored results when someone searches for your brand name. Like if your brand is "Dave’s Shoes," you can make sure you show up at the top when someone searches for "Dave’s Shoes."

Why do this? Look at how Facebook pays for ads that show up when people search for "Facebook ads," even though they're already the first result. From the example, you can see that TikTok is also trying to show up for the term "Facebook ads." That's why Facebook is paying to make sure they're the top result. The big questions are: Is this worth the money? Should you do it just because big companies do? Would that money be better spent trying to reach new people who've never heard of you? Which way gets you the best return on investment?

There are many questions surrounding this topic, and surprisingly, a lot of advertisers and even Google reps I've talked to don't have clear answers. Most advertisers are unsure if it's worth it. They often sponsor these ads because everyone else is doing it, their competitors are doing it, or because they believe it provides a good return on their ad spend.

When I discuss the campaigns I manage with Google reps and share my concerns, they usually ask what return on ad spend I'd be satisfied with for campaigns targeting my own keywords. My reply is: Can you even label it as a return on ad spend? If someone's already searching for my business and thinking of buying, can a conversion from that ad really be called a return on ad spend? This user would have bought something anyway. Whether they click on a sponsored ad or a free organic search result won't change their intent. They'll likely click on the first thing they see. But does that count as return on ad spend? If we can't measure it or are unsure how to, should you even invest in it? Should your marketing spend go towards campaigns where you can't clearly define success? And should you trust Google's possibly skewed reports?

Google often claims branded campaigns are crucial to prevent your customers from choosing a competitor. They use statements like "most shoppers like discovering new brands" or "50% of shoppers on Google end up buying from multiple businesses." These vague and broad claims are designed to make you feel that if you don't advertise, you're losing customers to competitors who are. Google also benefits when you run branded search ads. These campaigns often show a high return on ad spend, which looks great in reports. So if you're running both branded and non-branded campaigns, Google's average return on ad spend for your account might seem impressive, mainly because of the branded campaign's performance. For instance, if one campaign has a 20X return and another has a 1X return, the average will still appear high. Think about this: How often have you wanted to buy from a specific brand but ended up choosing a different one because it appeared first in the search results? For example, did you ever search for Amazon but shopped at Walmart because they were listed first? Maybe it happens, but isn't it more likely you're spending too much on ads targeting people who'd buy from you anyway, rather than bringing in new customers?

Because Google Ads and Analytics are linked, getting a clear answer is tough. Plus, many users type a brand name into Google instead of directly into the URL bar, making it even trickier to decipher their buying journey. They usually interact with Google just before purchasing. When analyzing the worth of Google ads in Analytics, the results are likely skewed. Most conversions are tagged to ads that are the user's final step, mainly due to how results are attributed to the “last click” activity. In simple terms, you can't solely rely on Google Ads or Analytics to gauge the efficiency of branded campaigns.

Another observation suggesting that branded campaign reports may be inflated is what I term as “drop back spend, generates better ROAS”. Here’s how it works: Let’s say you expect $20,000 in sales over the next week. Most of these customers will search for your brand on Google. Without ads for your keywords, the majority will locate you through Google's organic search. As you spend more on ads, more users get funneled through your sponsored ads, diverting them from organic results. If you spend $2,000 one week and Google reports $15,000 as "return on ad spend," it appears as a 7.5X ROAS, which seems impressive. But if you spend only $1,000 the next week and get nearly the same results, it suggests you might have been overspending on retargeting.

So, how much should you invest in branded campaigns? There isn't a one-size-fits-all answer, but a general recommendation would be to keep spending minimal unless you're confident of the campaign's value. Avoid spending based merely on Google's reporting, and don’t invest in branded campaigns without a clear strategy.

To truly gauge the impact of branded campaigns, many approaches have been suggested, but I find most unconvincing. A credible way is through an incremental test, where half of your target audience sees branded ads and the other half doesn't. For instance, if you're advertising in California, you can divide zip codes into two groups. One group sees the branded campaigns, and the other doesn’t. By comparing the revenue from both groups, you can derive the actual benefit of the ads. Running this test multiple times with different data can further validate its accuracy.

This incremental test model can be expanded to assess the efficiency of advertising across multiple platforms, especially when multiple platforms claim credit for a sale.

My Recommendations on Branded Campaigns:

It's simpler than many ad platforms suggest. Branded campaigns either help boost revenue or merely redistribute existing revenue. Without a clear strategy and understanding of your KPIs, it's best not to run these campaigns. Many advertisers get lured by the results and end up spending inefficiently. The impact varies across industries. Once you comprehend the genuine incremental revenue from branded campaigns, ponder if those resources would be better spent targeting new users who've never visited your site.

In summary, while Google Ads promotes the significance of branded campaigns, businesses must be discerning. Over-reliance on such campaigns may result in inefficient spending, targeting audiences already predisposed to purchase. For a precise assessment of branded campaign impact, consider implementing an incremental test model. This approach will allow businesses to determine the genuine incremental revenue from these campaigns and decide whether resources are better spent targeting entirely new audiences.