Brand Bidding: the invisible scam that drains your sales

The practice of Brand Bidding is becoming more frequent in competitive sectors and, silently, draining media investment from various brands

Um study from the Competition and Crowd‑Out for Brand Keywords in Sponsored Search (Simonov et al., 2018) shows that, in some cases with 4 active competitors, until 42% of traffic originally from the Focal brand may be intercepted by competing advertisements.

In the guide below, you'll understand why Brand Bidding is considered an invisible scam and how to identify the signs before your results are compromised.

What is Brand Bidding?

Brand bidding is a practice of unfair competition In which a company uses the Name of a competing brand as a keyword in paid ads, such as Google Ads, to attract the audience that was looking for that brand.

The expression “Brand Bidding” comes from English: Brand means “brand” and Bidding It means “to bid”. In other words, it's literally about “bidding on brands” within paid media platforms.

Most companies Don't monitor your own sponsored results, so you don't notice when competitors appear above them in searches. Thus, traffic that should be legitimate is silently stolen.

How does Brand Bidding drain your media budget?

When a competitor uses your brand name as a keyword in advertisements, it interferes with your costs, your efficiency, and even the perception of your audience. Below, we explain how this happens in practice.

1. Increased CPC and “repurchase” of clicks that would already be yours

The most immediate impact of Brand Bidding is the artificial increase of Cost per Click (CPC). If a competitor starts competing for the same brand term as you, the Google auction understands that there is more competition and increases the amount needed to appear in the first positions.

2. Loss of qualified traffic and drop in ROI

Users who search for your brand are, in general, the closest to converting, they already know you or trust your product. When the competitor appears first and deflects that click, you lose the most valuable traffic and the lowest acquisition cost.

Such a deviation reduces the ROI (Return on Investment) of campaigns, as it forces your brand to spend more to generate the same volume of conversions.

3. Trademark Misuse, Legal and Reputational Damages

Unlike legitimate media strategies, Brand Bidding is characterized by the misuse of a trademark.

In addition to the financial loss, the practice may cause Improper image association, confusing the public and eroding the trust built by the brand. In some cases, the issue may evolve into legal disputes.

Signs that your brand is experiencing Brand Bidding

This tactic often goes unnoticed, but there are signs that indicate when Brand Bidding is happening:

• Competitor appears in searches for the name of your brand and takes up the space that should be yours;
• Distributors or affiliates advertise using your name and redirect the click to another site;
• A sudden drop in CTR for brand campaigns indicates that part of the audience is being misled;
• An unjustified increase in the CPC of trademark terms shows that there is a dispute at the auctions;
• Suspicious sponsored results using your company name confuse the consumer and weaken your presence.

How to monitor and shield your brand against Brand Bidding?

There are simple practices for detect and contain this type of unfair competition before it causes major losses:

1. Search for your brand name on Google to identify suspicious ads;
2. Set up domain and keyword alerts to be notified when your name is used in third-party advertisements or URLs;
3. Perform paid media audits to review who is competing for your brand terms and how much this is affecting your costs;
4. Use specialized tools in Online brand protection that automatically identify undue bids and name variations;
5. Have an internal protocol for Brand defense in cases of misuse, requesting removal of advertisements and reporting to the platform.

Monitoring is the first step in stopping traffic diversion and protecting every legitimate click! The faster the problem is detected, the lower the impact on the budget and brand reputation.

Do you want to learn how to protect yourself on all digital channels? Check out Branddi's guide:”Brand Impersonation: step by step to protect your brand.”

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