If you utilize paid search, you’re probably paying “Google Tax” without even realizing it.

BY January 06

If you utilize paid search, you’re probably paying “Google Tax” without even realizing it.

So what is “Google Tax?”

Four years ago a writer penned a piece on “Google Tax” that explained how businesses are essentially forced to run paid search campaigns on their brand names which, of course, lines Google’s pockets. Since then, with all the changes to the format and display real estate that Google has made, the value of organic listings has declined. This creates a dilemma.

The basic mechanics of paid search revolve around finding and paying for ads that either convert at the lowest cost, or provide the highest return on your investment. There are a lot of tricks and tips involved to optimize any paid search campaign. However, pretty much every dealership’s campaign includes a similarity – their own brand name.

In general, any consumer search for a dealership’s name should return a result with the dealership’s website high in organic rankings – most likely the first result on page one. At that point you have two decisions: run paid search ads on your brand name to block competitors from doing conquest ads, or choose not to run brand name keyword campaigns and hope and pray that your competitor is not bidding on your name and fishing for your customers. You become an easy target and most dealers do bid on their competitors.

In the automotive industry, dealers are surrounded by many entities competing to drive online traffic away from their dealership including their OEM, a competing OEM, competing dealerships, third party lead providers, used car listing sites… the list goes on.  In choosing not to bid on your dealership’s name, you open the door to these competitors running paid search ads that effectively conquest your business. In fact, I know of a dealer who spent a large amount on TV ads but their competition reaped all the benefit as the dealer chose to cease running paid search ads for his brand name. His competitor bid on that dealership’s keywords and had a record sales month. After all the money and energy invested into your dealership it makes no sense to go cheap and not pay for branded keywords.

A long time ago (in a galaxy pretty close by), this was a legitimate choice because paid ads took up significantly less space on the search results page, and more real estate was given to organic results. However, Google has made dramatic changes, little by little, that have effectively reduced the number of organic search results above the fold, while increasing paid search ads – some of which are in prominent places, such as map listings.

“Google Tax” pretty much boils down to the cost of doing business. You never want to open the door for a competitor to hijack valuable search keywords such as your dealership’s name.

So, your choice is to pay the tax or put your head in the sand and not pay for branded keywords and let your competitors merrily steal away your customers. You may save some money on the surface by reducing your paid search ad budget  – but will that reduction in budget be overshadowed by the sales you may lose to competitors?

If you’re going to play in the paid search sandbox, be ready to pay “Google Tax.” As organic listings continue to get pushed below the fold, and as mobile search results continue to evolve, expect the tax to just keep going up.