How to Save Marketing Money by Being Nice

By | January 12th, 2015

Raining Money on Google

We have tried a myriad of ways to promote the Backblaze online backup service. While most people sign up ‘organically’ – through a suggestion from a friend or after reading an article, we do spend many thousands of dollars monthly on Google Adwords alone. For years we have tweaked ad copy, keywords, targeting and more to optimize our ad spend. This month I decided to try something different: being nice. And guess what, it worked.

The Two Types of AdWords

While there are an infinite number of ways to look at ads in Adwords, there is one critical division: Unbranded versus Branded.

Unbranded AdWords Keywords

Unbranded ads are what most people think of when they imagine advertising on Google. Search for “sports car” and you’ll see:

Search for sports car

The first two items are ads from Jaguar and Mazda hoping to interest you in one of their sports cars. (The third item is the first ‘organic’ result which is not a paid ad.) These ads target people who have potentially never heard of the Jaguar F-Type and didn’t know that Mazda sells convertible sports cars; these companies want to introduce what they offer to new people.

Branded AdWords Keywords

Branded ads on the other hand are ones which target people searching for a specific company’s product. In this example, I would search for “Jaguar F-Type”:

Search for Jaguar

Since I know I am looking for this particular car, all the ads are offering me exactly this car (as is the first organic listing.) The 2nd and 3rd ads are regional car dealerships promoting particular offers to get me to buy from them. However, you’ll notice that the 1st ad is from Jaguar promoting this car.

Why would Jaguar spend money advertising this car to me when I have already shown explicitly that I’m interested in this car and already know that? Because there have been many studies to show that people often click on the ads even if the first organic result is exactly what they are looking for.

Backblaze does this as as well. Search for “Backblaze” and you’ll see:

Search for Backblaze

Even though you already know Backblaze, and typed in a search specifically looking for Backblaze, and the first organic result is the Backblaze home page…we still pay Google to have an ad show as the first result.

The Arms Race

Of course, since potential customers looking to backup their computers are searching for “Backblaze”, other companies see this as an opportunity to advertise to them as well. Since the Backblaze website is incredibly relevant to the search “Backblaze”, our cost to advertise to people searching for us is quite low per click. But when other companies start advertising for the term “Backblaze”, our costs start to increase as Google’s algorithms see a bidding war.

Over the last few months, two other online backup companies started advertising for our branded keywords, increasing the times their ads show up from approximately 0% of the time to 75%+ of searches.

Seeing this my initial reaction was: “If they’re going to advertise for our terms, we’ll advertise for theirs. Our product is good. Our conversion rates are good. Our retention rates are good. We’ll crush them!”

But…if we do this, what will actually happen?

They’ll spend a bunch of money bidding up our keywords and stealing some of our customers.
We’ll spend a bunch of money bidding up their keywords and stealing some of their customers.

All of us will end up paying Google a lot of money, but end up with the same net number of customers.

De-Escalation Of Brand Keyword Wars

Instead, I tried a different approach and sent the email below to the other companies.


Hey, I noticed you’ve recently started advertising under our branded terms.
I would like to request that you stop.

As you probably know, 90% of computer users don’t use online backup services. As such, your company, Backblaze, and the other online backup companies have a huge opportunity in signing up new customers. By advertising under our branded terms, you are instead chasing the much smaller opportunity of trying to steal customers who are already planning to sign up for Backblaze.

If you continue to advertise under our branded terms, obviously we’ll need to start advertising under yours. In the process you’ll take some of our customers and we’ll take some of yours. The net effect for both of us will be approximately zero…but we’ll both end up paying Google in the process.

So, how about you sign up your customers and the 90% who aren’t doing anything. We’ll sign up our customers and the 90% who aren’t doing anything. And we’ll let Google make money off other companies.

Yes?

Thanks,

Gleb


Two days later I received the following reply:


I would like to thank you for your candid and common-sense approach. As you rightly pointed out in your email, the net effect of bidding on each other’s branded keywords is zero. After inquiry, we have advised the business to cease bidding on Backblaze branded terms and received confirmation of the same as of approximately 7:30pm EST on Thursday, December 4. While we are competitors, we appreciate the open dialogue you started which provided a swift resolution in both our interests. Thank you.


Being Nice

We work hard to build a great product, a great experience, and a great company; and we work doggedly to let people know we exist so they don’t lose data. Being aggressive in business and marketing is critical to grow a business. But sometimes it’s more effective to take a step a back and realize not everything is zero-sum.

Have you ever had the opportunity to do better by simply being nice?

 

Gleb Budman
Co-founder and CEO of Backblaze. Founded three prior companies. He has been a speaker at GigaOm Structure, Ignite: Lean Startup, FailCon, CloudCon; profiled by Inc. and Forbes; a mentor for Teens in Tech; and holds 5 patents on security.

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Category: Entrepreneurship