How will Google's AdWords change impact SEM?

How will Google's AdWords change impact SEM?
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When Google announced changes to their Trademark Policy in March, they put brand marketers across Australia and New Zealand on alert.

Now that the changes are upon us, it’s a good time to look at what agencies and brands can expect and how we are reacting to the policy change.

We have seen coverage on the SEO implications of this change, but what does it mean for SEM and how can you limit drops in brand traffic for your company?

There are two scenarios that will come into play for brands;

1. The direct competitor bidding which is likely to create a stir between directly competing businesses,

2. The scenario where a company that on-sells a product or service will have the ability to bid on these specific keywords, for example David Jones bidding on Apple product terms;

Both these scenarios should deliver a benefit to the consumer from a greater ad variety with better informed decisions and cheaper purchases the likely outcome.

What to expect from the change

Experience from other markets, for instance the United Kingdom in 2008, has shown a Cost per Click spike on previously trademarked keywords over a period of one to two months after the changes take effect, due to an initially higher level of competition on the keywords.

Now that the changes have taken effect we expect an increase in the number of brands that have previously not been bidding on their own brand terms to begin doing so.

With potential competition in play we anticipate Cost Per Clicks (CPCs) to be slightly higher than before the changes but with Quality Scores and Click Through Rates defining the individual advertiser’s CPC, it is likely that trademark holders will see the costs for their trademarked terms return to previous levels fairly quickly as affiliates and competitors will experience significant CPCs and potentially negative return on investment.

How should you prepare your AdWords Campaigns?

We generally recommend our clients bid on their own brand term. Average CPCs are very low, sometimes as little as $0.05 for the trademark holder, and bidding on your own brand term enables you to take up more real estate on Google.com.au in the top spot through the utilisation of sitelinks, location and various other Google product extensions.

In addition to these two benefits, studies (see here and video) have indicated that even when both paid search and organic search positions from the same advertiser are high, paid search traffic is incremental.

Finally, due to the fact that we can optimise and immediately update brand messaging and landing pages on paid search results, click through rates and conversion rates are generally higher than for organic search.

We are recommending that clients who are already bidding increase brand campaign CPCs to ensure position one for their own brand ad with Trademark policy change newly implemented to ensure brand keyword Share of Voice stays at current levels (ideally 100%).

In addition, we have suggested raising brand keyword allocated budget threefold for the first month.

What now?

As with any change Google makes, the consumer is going to be the big winner through an improvement to the relevant information served on any Google search going forward, which means better informed decisions whether consumers are in the awareness, consideration or purchase phase.

Google’s changes will cause a stir among AdWords advertisers in the next two months among small, medium and large enterprises alike. However, we believe that activity and costs will normalise relatively quickly and that as a trademark owner it is likely that after a short-lived spike in CPCs for your trademarked terms, these will drop to acceptable levels very quickly.

If you are not bidding on your trademarked terms, we recommend that clients start a campaign for these keywords now that the changes have taken effect. Monitor this campaign as well as the Search Engine results pages for brand term keywords closely over the following months to avoid overall drops in traffic as an effect of competing advertisers cannibalising your organic traffic.

Andreas Andersen is a business director at Aegis-owned search marketing agency Columbus 

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