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Bidding Up on Competitor Terms: Results and Takeaways

Published: April 3, 2017

Author: Charlotte Haab

Running competitor campaigns on the search network is a much debated strategy that often doesn’t pay off. In many cases, we have clients interested in disrupting their competitors using paid search. It’s a good idea in theory but can end up being pretty pricey. In a recent test, our client wanted to see what would happen if we were to bid up to position 2.0 on the keywords of their top competitors.

The goal of this test was to see how keeping ads directly below our competitors would impact our normal KPIs like CTR, CPCs, and unit sales. In other words, could we steal any business from our competitors in their own SERP? In this post I’ll take you through the strategy of the test, as well as the outcome.
To start, it’s important to set realistic expectations. One of the biggest pitfalls when running competitor campaigns is Quality Score. It’s rare to have a competitor keyword with a QS over 5, and in this case, the majority of keywords we were bidding up on had a QS of 1/10. Since QS directly impacts your overall ad rank, CPCs on competitor keywords can get borderline astronomical. To add insult to injury, your competitor is probably only paying a few cents for their own brand terms with 10/10 quality scores.
Once you’ve set the expectation that you’re going to be paying a pretty penny for each click, it’s important to write some very compelling ad copy. If you’re going to show up, you better show up to play. Get creative; get aggressive, even! Just make sure you stand out and have something to offer. Since ad relevancy is already such an issue for competitor campaigns, try to make the copy as relevant as possible, just short of including your competitor’s brand name – you’ll likely get flagged for trademark infringement if you do. The ultimate goal is to get a potential customer to choose you over the first-place competitor ad while staying as relevant to your keyword as possible.
Once we got our ad copy implemented and our average position where it needed to be, there was nothing to do but wait on results. What we saw was not surprising: there were some positives as well as some negatives. Previously our competitor campaigns were sitting around position 4.0. Consistently showing in position 2 increased CPCs nearly 75%. As a result in a very short test period we spent over 1,000% more. Even though we saw an increase in conversion volume, our CVR actually fell almost 40% during this test, inflating our CPA 175% – likely the result of showing to much more low-intent traffic.  Despite all those horrible metrics, we did see a nice increase in CTR – nearly 200%!

Bidding to a heightened position has its pros and cons – especially in a competitor campaign. Clients ask about this strategy fairly often, and depending on your client’s goals and budgets, this could be the right move for your account. Just be sure to keep in mind that while CTR will undoubtedly increase, so will your CPCs – with no promise of improved efficiency metrics. Proceed with caution!

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