My monthly paid search column at SEL, in case you missed it: Should companies pay for ads on their brand name? There are plenty of good reasons to do so regardless of the ROI, but those keenly interested in ROI and vexed by the concept of paying for traffic on their trademarks still ask the question. We've done some research on this topic that we'll share below. We focused on trying to answer a couple of specific questions:
- Do brand ads cannibalize traffic from organic listings? and
- If the answer to the first question is: "it depends", on what does it seem to depend?
- Destructive Cannibalization: we flip on the ad and find that the overall traffic declines. For example: The ITR is the ratio of incremental traffic to measured ad traffic, which in this case is -200/400 = -50% This might also be referred to as "1 + 1 = 0.5"
- Constructive Cannibalization: presence of the ad increases the overall traffic volume, but some of the traffic on the ad is 'stolen' from the organic listing, so the ad can't take credit for all of the traffic it sees, only the incremental traffic driven. For example: Pretty clearly, Constructive Cannibalization can range from one edge case we'll call No Cannibalization whereby 100% of the traffic on the ad is incremental, to the other edge case of Perfect Cannibalization where the presence of the ad doesn't destroy traffic, but doesn't increase it either. In the language of ITR, Constructive Cannibalization exists when the ITR is between 0% and 100%. Clearly, somewhere in the Constructive Cannibalization ITR range from 0% to 100% the advertising spend on brand ads likely shifts from a negative ROI to a positive ROI.
- Amplification: The traffic through the sponsored link is 100% incremental AND the ad is responsible for increasing the traffic on the organic link as well. For example: The best of all scenarios, the ad creates more love all around. When ITR is greater than 100%, an ad is having more positive impact than what is readily apparent. Many folks with an agenda conflate Constructive Cannibalization with Amplification, using the fact of incremental value greater than 0 to imply that 1 + 1 = 3. Amplification may exist in some instances, but the existence of incremental overall traffic doesn't imply amplification.
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