Google scrapped rules preventing advertisers from bidding on branded keywords on 5 May. The change means consumers searching for specific brands, such as Nissan, may now receive sponsored listings for their closest rivals.
Latitude chief sales and -marketing officer Neil McCarthy claims that costs have soared by as much as 40 percent since Google's ruling, but have now settled to a 17 per cent increase. The search agency tracked a range of keywords across its client list before and after the changes.
The cost increase is being driven by competition for mid-range branded keywords. It is uneconomical for competitors to bid for well-known brands, as consumers are specific about what they are looking for, according to Latitude.
New figures show that nine out of 10 internet searches are for brand names rather than generic terms.
According to Hitwise's report Managing Your Brand Online, 88 per cent of UK internet searches for the 2,000 most popular search terms in May 2008 were for branded terms - up from 65 per cent in 2005.
The 10 most popular searches were brand destinations, led by Facebook, Bebo, YouTube and MySpace. The report found that 8.7 per cent of searches for the top 100 online brands in the UK results in a visit to a website not operated by the brand owner.
The Search Works group retail account director Stewart Hunter said that while the top searches are for brand names, retailers will still gain large amounts of traffic from searches for generic terms.
For more details see the September issue of Revolution, which is out now.