It appears that the percentage of clicks going on Paid Search is falling, which is potentially a misleading statistic (see my blog on Google and the 80:20 ratio). But they make another, very interesting point.  They indicate that the biggest fall is on brand-name keywords, and quote Andy Beal at Marketing Pilgrim, who says:
“Is that likely due to a reduction in spend, or Orbitz et al figuring out that they really don’t need to spend so much on paid advertising–considering they’re #1 in the organic results?”

Leaving aside the fact that, in the UK at least, Orbitz are still brand-bidding, this is quite an interesting trend, if true.

The question of whether to bid on your brand name or not has been the subject of many blogs in the industry over the years, but most people are in agreement that you should certainly at least consider bidding on your name.

Back in 2006, Scott Woodard (also at Marketing Pilgrim) recommended bidding on alternative spellings and  mis-spellings of your name, and even slogans: http://www.marketingpilgrim.com/2006/12/9-cost-effective-ppc-branding-strategies.html

But the obvious argument that you get from clients is that if they are appearing top for their brand name, and people are looking for them by name, they were going to get the traffic anyway. There is certainly some truth in this, as a large percentage of the clicks on the PPC advert would cannibalise the natural clicks you were going to get anyway. So why bother?

Ian Lurie at Conversation Marketing, and Dave Davis at Redfly Marketing both make good arguments in favour of brand bidding: http://www.conversationmarketing.com/2008/03/defend_yourself_bid_on_your_br.htm
http://www.redflymarketing.com/blog/5-reasons-you-should-be-bidding-on-your-company-name/
To summarise, these are the critical benefits:
1) The traffic’s cheap. You’ll get a big advantage on your Quality Score, and your clickthrough rate will be high (giving you another QS boost). So in most cases, you’ll only have to pay pence to appear for your brand name. And this spend will often represent only a very small percentage of your advertising spend.
2) Other people can bid on your brand name. There are no rules against it anymore, and if you don’t bid on your brand name, there’s a decent chance that one of your competitors will appear at the top of the search results when somebody is looking for you. It’s like driving past Sainsburys and Asda to get to Tesco – it’s inevitable that you’ll lose some customers, it’s just a question of how many…
3) Natural Search results are in a constant state of flux. It’s quite possible that your website won’t be top for your brand name all of the time, particularly if it’s quite a common name, or consists of an English phrase. This is particularly an issue if you’re a relatively small company, and your website doesn’t have much age or a lot of links to it.
4) Controlling Your Message. You can control exactly what people see when they search for you. You can show your latest promotion, and perhaps more importantly, land them on a page of your choice.
5) You may not rank that well for misspellings of your name. Not everyone knows how to spell your brand name. We used to have an account for somebody who sold Wedgwood products, but I found that more people spelled it Wedgewood than were getting the name right.

From this, it sounds like a no-brainer. But it may not be quite that straightforward. There are a number of questions you should ask before making a decision.
1) What’s it going to cost? We’ve got a client who pays nearly £3 per click to bid on their brand name, despite getting clickthrough rates of 20% – 40%. The reason for this, aside from the high value of the traffic, is the fact that their name is also a common phrase that people search for.
2) Is anyone else bidding on your brand name? If you are a new website, or a relatively small player in the market, there’s a good chance that they aren’t. In which case, if you are top of the search results, you’ll lose very little traffic, if any.

Whether you decide to bid on your name or not, you’ll certainly want to make sure that your affiliates aren’t allowed to bid on your brand. This is a fairly standard clause in affiliate contracts, but there are plenty of unscrupulous affiliates out there who will ‘accidentally’ bid on your brand…

To come back to the original point, it appears that more and more advertisers are stopping their brand-bidding. Why is this?

A few possibilities spring to mind. Firstly, it’s possible that businesses are dropping their PPC campaigns completely. This would certainly fit with the other results in the E-Consultancy report, but it doesn’t really tally with results that I’ve been seeing recently. With a few exceptions, competition appears as high as ever during this recession.

In the past, businesses have often cut their marketing budgets when times were hard – something that has always made little sense to business analysts. Based entirely on my experiences, it appears that this just doesn’t seem to be true this time around.

Another possibility is the effect of competitor brand bidding on your Quality Score. If you’re a small advertiser, bidding on keywords with very high traffic volumes, and very low clickthrough rates, can have a very serious impact on your Account Quality Score, undermining every other keyword in your campaign, for very little reward. On many of my accounts, I’ve removed competitor names, in order to improve the overall account quality.

If this is a common conclusion, and fewer people are bidding on competitor terms, perhaps the argument for defensive bidding is lessened. But I doubt that this is that commonplace – there are very few people out there worrying about their Account Quality Score, perhaps because Google don’t seem to like talking about it…

So, should you bid on your brand name?

On this, I tend to agree with Anil Batra: http://webanalysis.blogspot.com/2008/01/should-you-be-paying-for-clicks-on-your_15.html. Testing is critical if the spend on your brand name is going to be a significant amount of money. Work out how much traffic your brand name drives from natural search only, then add PPC and see to what extent it increases, and at what cost.

This is really the only way to be certain, but if you do decide to bid on your brand name, there is one thing you must do – split it out from the rest of the campaign, at least in the reporting. Typically, the performance of your brand name will be much better than other keywords, and combining them to analyse the performance of your account will make the performance look better than it really is.

For example, suppose that your breakeven cost per conversion is £20. You get a report from your Agency reporting 100 conversions at £15 each (total spend £1500). You’ve made £500, so you’re happy.

But you ask them to break out the brand name, and they show you that your brand name generated 50 conversions at a cost of £2 each, and the other keywords generated 50 conversions at £28 each.

Suddenly things aren’t looking so good. You’re clearly losing money on the rest of your account, but it’s being disguised if the data isn’t being separated out. A good agency will generally break your performance down into Adgroups and Campaigns in your reports, but there are a few out there who don’t…

In summary, I’d say that bidding on your brand name is almost always a good idea, so if you aren’t, I’d definitely test it.