How to prevent SEM cannibalization between sub-brands within a multi-brandDecember 9, 2014
In the consumer goods and consumer wellness space, one multi-brand often spawns different products under sub-brands. For example, Arm & Hammer has a hugely varied product roster, from toothpaste to laundry detergent. Even though some of the sub-brands have their own names, by sharing such a well-known and well liked parent brand name, each sub-brand benefits from the strong multi-brand recognition and brand loyalty.
On the other hand, as a search advertiser tasked to promote individual sub-brands, and engaging in programmatic as one tactic, we prefer to see consumers use the sub-brand names, in order for us to bid on a more narrowly defined target audience, avoid cannibalization, and maintain cost efficiency.
But reality rarely conforms to our hopes: a very strong parent brand name could sometimes overshadow the sub-brands. For contact lens users, when is the last time you searched for “Acuvue TrueEye” or other sub-brands instead of simply searching for “Acuvue”? Chances are you search simply for “Acuvue” just as often. In the SEM space, if the sub-brand has a very low search volume to capitalize on, the marketer is compelled to look elsewhere for traffic.
The next logical place is the parent brand, which can certainly capture more traffic, but it can also sacrifice relevancy. And worse yet, without coordination and a clear strategy, the sub-brands could compete in the same auction, creating a bidding war and confusing consumers.
How do you avoid cannibalization, when each sub-brand is promoted? Here are some ideas:
- They can decide to let one sub-brand monopolize the parent brand keyword, based on each of their business objectives and the relative value each gain from SEM. For example, sub-brand A has the most aggressive branding awareness goal, sub-brand B has the highest revenue potential, and sub-brand C has the highest profit potential. If the overall objective is to garner the highest revenue, then you should prioritize sub-brand B and allow it to exclusively bid on the parent brand keyword.
- Another way, relying more on the market force, is to let the sub-brands compete and test which has the best SEM performance, in a very controlled manner. This is a more reactive, but also more empirical approach. The rationale is that by using the same max CPC bids across all sub-brands, controlling and leveling the ad copy/landing page experience, marketers can test which brand has the best CTR, CPC, or rank. If the primary indicator of success is ad effectiveness, then you should focus on CTR differential; but if the primary indicator is cost efficiency, then it should be CPC. Once you have the test result, you could decide which brand or brands should continue to capitalize on the parent brand. In the example below, because there’s no other competitor, set a max CPC at the minimum first-page bid the engine recommends. If your primary indicator is CPC, then you should focus on sub-brand A and B. But if you have a CTR goal of 4% or above, then you should focus on A and C.
- Another scenario to consider is the presence of a competitor. Even though a competitor rarely has higher quality score on a multi-brand term than the sub-brands, it could impact CPC significantly through bidding. Take the example from above; now remove sub-brand C, and add in a competitor. We don’t know anything about this competitor’s tactics, but we know that sub-brand B is seeing its CPC increasing from $3.50 to $3.75. Based on this, we could deduce the Ad Rank of Competitor 1.
There are two options for sub-brand B: one is to stay in the competition with an increased CPC, but still retaining the top SERP real estate along with sub-brand A; or it could decide to leave the auction because it can’t tolerate the increased CPC. In the last table, we can see that, with Sub-brand B dropping out of the auction, it helps sub-brand A decrease the CPC from $3.20 to $3.00.
- Aside from the above bidding tactics, there are still more ways for inter-brand coordination:
- Enter the auction in different dimensions: cannibalization can then be entirely circumvented, because the search engine allows targeting in these dimensions: time, location, device (to some degree), and demographics (which is currently in beta on Google). For example, if sub-brand A’s primary users are on the West Coast, whereas sub-brand B’s is on the East Coast, then the two sub-brands can geo-target to avoid competition.
- Sitelinks: creating a parent brand only campaign, and house all the sub-brands as sitelinks.
At the end of the day, there are multiple ways to circumvent inter-brand competition for multi-brands. But first the marketers must determine the overall objective and brand priority, and take their strategy cues from there.