Let’s set the record straight: competitor keywords in Search Engine Marketing are the gross, disgusting, unprofitable, useless underbelly of digital media’s least profitable tactics. The average business will spend 150% more per click on competitors’ branded keywords than a normal, category keyword.
I’m not talking about when you do a PPC competitor analysis and find great industry keywords you might have otherwise overlooked; I’m talking about what you really need to watch out for: spending actual money on the brand name of a competitor or their branded products.
I’m talking about the McDonald’s franchisees of the world bidding on keywords like [Burger King] or [Whopper Meal]. The “dog eat dog” of the business world flashes a glint of red in the client’s eyes and they insist beyond doubt that this is the best steal share tactic for their business.
Truly, I can’t argue with the emotional side of these claims, I just deal in facts. Here they are.
A Quick And Easy PPC Competitor Analysis
First, let’s set up a scenario. You compete in a highly competitive online market for high-end remodeling projects. Your average cost per click is somewhere around $30, but your branded keywords go for somewhere around $6-$10.
You notice that you’ve started losing impression share to a new competitor offering a package that includes an in-home follow up inspection for free. You devise a plan to bid on the competitor keywords with your own advertisement, highlighting your own version of the offer, where for a small fee, you guarantee the remodeling project for up to a year.
This is a pretty decent strategy when it comes to traditional media. Your print advertisement in a magazine or your billboard ad right next to a competitor doesn’t run you a separate cost- you’ll both pay the $1200 flat fee (or whatever the cost may be).
But Google Ads pricing is based on a combination of how much the advertiser is willing to pay and user experience, which is how, if you pursue this strategy, they’ll bankrupt your entire budget.
Why Branded Competitor Keywords Are Unprofitable
Okay, so you’ve just put together your new campaign for competitor keywords – you won’t want to use the same campaign, which I’ll explain why later. Now let’s look at the price of each keyword.
You’re probably seeing something in red that says, “below first page bid (something horrendous).” If you’re not seeing that, thank your lucky stars. That means that your campaign could at least function as a brand awareness campaign, but you better pray that you never get clicked on.
When you finally do get clicked on, you’ll realize what a mistake it was to bid on these keywords. You’ve probably upped your bids a few times to try and gain some traction, all the while assuming that branded keywords will probably run you about $6-$10 like your own branded keywords do. You get your first click and the cost was $75 – your maximum CPC for that ad group.
That click probably immediately bounced, since the person was originally trying to reach your competitor anyway and just made the mistake of clicking on your ad. They performed no online action that was valuable to your business, and probably wouldn’t even recall your brand name a few weeks later after they’ve forgotten about you.
Here’s what happened on the back end: your quality score was abysmal (probably a 1-3 at best), because Google noticed that neither your ad copy or landing page didn’t match the keyword you were bidding on.
Meanwhile, your competitor had ad copy and a landing page stocked with the keyword you both bid on. Their quality score was likely an 8-10.
That means that, given all things equal, your competitor’s cost was insanely lower than yours when it came to bids on that keyword, or any of their other branded keywords for that matter.
While their cost to win that auction would have been won if they’d just bid up to $10 on their keyword, you had to win that auction with a $75 bid, just because your ad/landing page and keyword were so irrelevant.
So, all things considered, is it worth it?
When To Use Competitors’ Brands In Keywords
There’s just a handful of instances where I’ve seen this work.
Most of the time, you’ll see success in bidding on competitors’ branded keywords in 3 instances:
- When the competition isn’t bidding on themselves
Google Ads Managers are always taught to split some budget with their own company’s branded keywords, if only to have a defense against competitors doing exactly what we’ve been talking about.
If the competition is not bidding on themselves, however, they’re relying on their organic search results, which we can beat with a relatively small bid and steal their customers relatively easily.
- When the audience is more elastic
If you’re selling something 24/7 emergency repairs, your target audience is not concerned with brand names. They need something done immediately and are not picky about who does it. That’s what we call price elastic.
If someone is buying a brand-new car, you can bet they’d be pretty inelastic on brand, especially if they’ve owned a really terrible Hyundai, or have previously owned a Tesla they were in love with.
These situations don’t achieve much with competitors’ branded keywords, since the audience will choose their favorite brand no matter how good your ad looks.
- When the price of the sale is below $50
This goes straight back to the elasticity thing. Somewhere above $50, customers really start paying attention to what they buy. They’ve done the research, they’re pretty convinced on what they want, and your attempt to steal share that late in the funnel has very little chance of success.
Your average pizza salesperson, though, might be able to rip off a few semi-loyal customers of another brand, but only if they offer something brilliant or brand-new for which the customer would be willing to change their habits.
The best way to know whether to use competitors’ keywords in Google Ads is to talk to your SEM manager. It seems like a brilliant idea, but they’ve likely seen a million cases where it performs poorly, and probably won’t advise it.
Then some companies like AdEspresso, who argue that there is success to be found if you know everything you need to know to do it right.
By all means, steal the competitor’s category keywords – you can do it with tools like SpyFu or Wordstream – and keep honing your own list of new keywords. But don’t lose your shirt on this “forward-thinking concept” that’ll turn out to be a wash.
Resources:
What to Watch Out For When Using Competitors’ Names as Keywords in Google Ads
AdWords Competitor Targeting: Everything You Need To Know To Do It Right
https://www.evoluted.net/thinktank/marketing/competitor-brand-bidding-adwords
