Back to Basics – Paid Search Competition

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Dictionary.com defines competition as the “rivalry between two or more persons or groups for an object desired in common, usually resulting in a victor and a loser but not necessarily involving the destruction of the latter”. If we apply this to paid search it would go something like the “rivalry between two or more advertisers for eyeballs, clicks and leads/sales, usually resulting in different degrees of winners and losers”.

Eyeballs

Eyeballs

There are over 3 billion searches made on Google every day which, depending on your target market, represents 3 billion pairs of eyeballs that are looking for something you might sell. Realistically, each niche market will have significantly less eyeballs searching for what it offers. The beauty of paid search is that it gives you the ability to put a relevant ad in front of these eyeballs. Depending on your budgets and bids, you may not be able to show ads on 100% of the searches on the keywords that you’re targeting. Search impression share gives a measure of the proportion of total searches your ads were shown on out of the total impressions your ads were eligible to show on. Generally, the more competitive a category is the lower your search impression share will be for a given dollar of spend if all else remains equal. The Google AdWords auction insights tool provides great competitor insights as to who is bidding on the same keywords as you, what their impression share is, their average ad position and how often they out ranked (were shown higher than your ads) you in the search results.

Clicks

Computer and Mouse

So, you’ve got past the first step and your ad is showing in front of relevant eyeballs. Next, you’ve got to fight it out with your paid search competitors and get the eyeballs to engage and click on your ad. A few important aspects here:

  1. Competitor ad copy research to identify what competitors are offering, what your points of difference are and what your competitive advantages are. Keyword relevancy plays a part in achieving a high quality score, as well as appearing relevant to users e.g. if you were bidding on the keyword “plumbers Auckland” and your ad referred to “plumbers Wellington”, you’d likely see a low click through rate. You also want ads to be on brand but also stand out – don’t be boring!
  2. The maximum CPC bid that you set is a crucial determinant in where your ad appears in the search results page; bid too low and your ad will show far down in the results or not at all, bid too high and you may not be achieving an optimal return on ad spend. Each time that your ad is eligible to show for a particular keyword, AdWords will determine the position that your ad is shown (ad rank) based upon your quality score and maximum CPC bid. As this is the case for all advertisers; the quality scores and bids of your competition also impacts where your ads sits.

Leads/sales/other conversions

Sales

So, you’ve got the click at step 2 – well done, you’re somewhat victorious in the competition that is paid search. Measuring the effectiveness of paid search campaigns purely off cost and click metrics is not a good idea, as you may be paying to send low quality traffic to your site. A particular keyword may be a relatively cheap source of clicks, but if these clicks don’t convert into sales or leads, or have poor on site engagement then it’s not going to be a profitable endeavor. A focus on keywords that convert at the highest rates and generate the highest return are where efforts should be concentrated. For example, you’d be better off spending $500 to obtain 500 clicks and 20 conversions than you would be spending $500 to obtain 1,000 clicks and only 5 conversions, as what is ultimately more valuable are clicks that convert and result in an action that’s profitable to your business.

Take a good look at competitor landing pages and offers – is your offering for that particular keyword competitive? What about the user experience on your site versus competitor sites? Does traffic convert better if you send it to category pages as opposed to your home page? Are your campaigns generating positive return on ad spend?

Keeping on top of your paid search competition and what your competitors are up to is hugely important as every day has the potential to be different, with new competitors entering the paid search space or competitors leaving, competitors increasing their spend or bids, or competitors offering a special deal or discount. Everyone wants to be the victor, after all.

Tessa has years of experience in data analysis and number crunching, following the completion of a Bachelor of Commerce with majors in both Finance and Economics. Since discovering the ever changing, complex, and data driven world of digital marketing and SEM she’s never looked back. Tessa currently manages campaigns for clients across a range of industries; specialising in the management of both lead acquisition and e-commerce campaigns. Finding the sweet spots to maximise the return for clients is all in a days work.

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