Brand awareness boosts Branded Searches and Direct Traffic. So, definitely, building a brand will drive profits and sustainability. The only way to build a profitable and sustainable online business is by:
(1) consistently lowering the cost of traffic,
(2) building a premium on the price based on brand equity or ideally
(3) the combination of both.
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What is Direct Traffic
The only source of free traffic – and with little risk of being intercepted by your competitors. This is when people type your URL in the navigation bar of their browser or have your page bookmarked in their favorites.
The way to leverage this traffic source is by building a popular brand within your niche or target market, in combination with an easy to remember URL, ideally linked to your brand name (Eg. www.<YourBrand>.com) . The more popular your brand gets, the more people will get to your website without searching on any third party site.
For instance if you just started your new car shopping journey, before searching for a “car dealer near me” you will probably seek official vehicle information, models and specs on the corporate brand site, and those brands on your top-of-mind will get your initial hits.
BTW .. Once you visited that brand site you know what’s coming next. That brand is going to chase you with remarketing ads wherever you go on the Internet for several days.
If you are shopping for mid-sized economic Japanese sedan, you will likely start your journey by typing honda.com, toyota.com or Nissan.com on the navigation bar of your browser. Because you would assume that these would the official URLs for the brand sites…. right?
What are Branded Searches
The second least competed traffic source are “branded searches” on Google. These are in-market shoppers using keywords that include your brand.
Search term: <your brand> + <your concern>
While it is possible for a competitor to intercept that purchase intention by bidding on Keywords with your brand, most clicks will go to the organic result that seems more official. However, a Paid Search Ad from a close competitor with an aggressive enough offer can always bend a loyal customers’ wills.
Logically, as the popularity of your brand grows the incentives to intercept your traffic also grow.
What are Generic Searches
These are searches without any brand name on its structure, for instance: <car+lease+deals+in+miami>.
If your strategy is to go after generic keywords with your Search Engine Optimization skills, you will probably reach a competitive positions on the Google Results Page in the short term and you may even drive a higher revenue than other business that are investing in building a brand. The risk with this strategy is that Google constantly changes its algorithm – and you have no control over it – and what had been a relatively stable source of traffic, can disappear overnight.
As in the world of offline market, the margins of online businesses also tend to zero … only much faster.
Don’t expect to make your business profitable by having a profit margin on a generic product, because it is not sustainable … because with entry barriers so low to sell online, the margins tend to zero … same as in the offline world, only that faster.
The brand equity you build will help you charge a Premium for your products that will translate into strategic and commercial advantages to block emerging competitors.
If you build a brand with high recall and a differentiated position, you can not only defend a Premium in your price, but also increase direct traffic and searches with a brand… hence, a more competitive a sustainable business.
Never forget that any traffic source is just one component of your Digital Ecosystem. You have to keep the bigger picture in perspective to effectively channel and monetize your traffic.
For the Automotive Industry, Direct plus Branded Searches account for 75% of the traffic.