Should companies bid on their own brand in sponsored search?

Abstract

Sponsored Search allows companies to place text advertisements for selected keywords on Search Engine Results Pages (SERPs). The objective of the present research is to determine whether and under what circumstances it makes sense, in economic terms, for brand owners to pay for sponsored search ads for their brand keywords. This issue is the subject of a heated debate in business practice, especially when the company is already placed prominently in the organic search results. In this paper we describe and apply a non-reactive method that is based on an A/B-test. It was employed in a case study of a European Internet pharmacy. The results of this study indicate that the use of sponsored search advertising for the own brand name enables advertisers to generate more visitors (>10%)s, resulting in higher sales volumes at relatively low advertising costs even when the company is already listed in first position in the organic part of the respective SERP.