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January 31, 2013

PPC Drafting: Coining a Term for a Competitive PPC Maneuver

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Hello, my name is Todd Mintz (Twitter), and I will be your guest blogger for today.  In this post, I’m going to try something I’ve never done before — attempt to coin a new paid search phrase (PPC Drafting) for an event that’s commonly seen by paid search managers who manage the accounts of strong business brands.

To introduce the term, I’ll need to talk about another topic not frequently mentioned in search marketing industry blog posts: NASCAR.

Drafting

Please examine the above picture and notice that one car has driven up to the back bumper of another car.  The driver is doing this because (due to some physics law that I never studied) there is less air resistance on the rear car, meaning the rear car can travel faster with the same effort (or the same speed with less effort).  Drivers “draft” off of other cars either to stay in position and conserve fuel or to save up energy for a potential passing maneuver via breaking the draft and using their reserve energy to try to pass the lead car.

In my tenure at PPC Associates, I’ve worked with a couple of clients that are more than just huge brand names; their brand actually defines the business category in which they reside, and few if any of y’all (I can say “y’all” because this is a NASCAR-themed post) reading these words would recognize the names of any of their direct competitors.  Both of these clients get massive amounts of branded search traffic (in fact, the volume of branded traffic dwarfs the volume of non-branded traffic), and their competitors know that the maximum chance of getting visibility is to bid on my client’s brand terms.

After all, it’s pretty easy for my client’s competitors to “draft” off my client’s brand.  While it’s nearly impossible for their competitors to rank ahead of my clients due to quality score, visibility in secondary positions (especially top of page) is still pretty prime placement and, depending on the circumstances, that secondary placement could be quite an excellent value for the competitor with a solid ROI.
Dale Earnhardt and Ron Hornaday: NASCAR Photography By Darryl Moran
To extend the NASCAR analogy further, my category-leading clients have the top cars in the race.  With quality score in play, the only way for a competitor to pass my client on the track (or in the auction) for a brand term would be either an accidental keyword omission/super-low bid or as part of a deliberate strategy.  However, I’ve seen the competitors try to get my clients to spend more per click by bidding my client’s brand higher, increasing the cost of the auction (which the competitor still loses).  The downside to this strategy is that the CPCs of the competitor clicks will also rise, threatening the favorable ROI of being in a “safe” second position.

What I’ve also done in response to competitor branded bid pressure is cut my CPCs a few percentage points below the average CPC for the keyword(s) in play during the branded bid run-up, which, in effect, concedes first position to the competitor for a small percentage of the auctions. This tactic doesn’t really save my client too much money, but exposes the competitor to even more additional cost. Furthermore, we know from experience (bidding on other competitor terms) that it can be quite challenging to ROI on a competitor’s brand when the CPCs are high…since the intent of the searcher was to visit another site, not yours, and that’s a tall order to overcome for getting conversions.

To sum up, PPC drafting is an excellent technique for a competitor to get easily noticed in an auction for a very visible branded term. So long as the competitor keeps their secondary position, it’s a pretty painless state of affairs for both companies in the draft. When the competitor gets out of line, that’s when the real racing begins, and like in NASCAR, the branded website in the lead has almost all the advantages in their favor.

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