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When – and how – to bid on competitors' keywords

Published: July 25, 2013

Author: Jaime Sikora

Recently, I had a client that was looking for more volume. One potential opportunity I suggested to him was bidding on his competitor’s keywords. He wondered a couple of things: 1) is this a good practice; 2) is this just another way for Google to make some more money?
Bidding on competitor keywords can be tricky. First off, they usually end up getting hit with a bad quality score and, therefore, end up being more expensive. Secondly, if they’re not already doing so, your competitors may begin to retaliate.
In regards to the second portion of my client’s question – yes, but it could potentially be a way for clients to generate more revenue as well. Keep in mind the following best practices and proceed with caution when it comes to competitor keywords, and maybe you’ll end up with some extra manageable traffic and conversions.
When to think twice about bidding on your competitor keywords
They’re not bidding on yours
Not that this should stop you, but understand that you might be the one opening up a can of worms. That, and in some industries, there’s a “gentleman’s agreement” amongst competitors to not do so – you can benefit from this as well, so make sure to think things over.
Your competitors are resellers
In the instance your competitors are amazon.com or some other retail giant reselling your product, and you get a kickback or benefit in some way, you might want to think twice on this matter.
You have a very tight budget or return on ad spend goals
As mentioned earlier, competitors’ keywords are usually a little more expensive because of the poor quality score. Also, if there are multiple competitors bidding on one competitor’s keywords, it can be difficult to get good positioning.
Another important thing to keep in mind is that, when bidding on a competitor’s keywords, you may very well be taking money directly out of your competitor’s pocket, seeing they searched on a specific brand name (but ended up buying from you). Therefore, it’s recommended that you or your clients take this into consideration and maybe be a little looser in your target CPAs/Return on Ad Spend, etc.

When you should strongly consider bidding on competitor keywords

They’re bidding on yours
The concept mentioned earlier – that you are taking money directly out of your competitor’s pocket when you convert on their keywords – well, if they are appearing on your brand name keywords, it’s safe to assume that once in a while, they convert on your keywords and take money directly out of YOUR pocket.  Not that you NEED to retaliate, but it is food for thought.
They’re showing on yours
Same as above, only, depending on the name of your business, your competitors might be showing on your keywords without intentionally bidding on your brand name. Let’s say your business is a sweater shop and your name is ‘Sweater Shop’. Your competitors might be bidding on broad match ‘sweater’ and getting matched to your brand name. You will want to take everything into consideration here – they might not be intentionally encroaching on our brand, but they may still take away some conversions.
You need extra revenue and have some cushion in the ROAS/CPA department
Like I mentioned earlier, these conversions are typically more expensive. However, if you are simply going for volume, or trying to get additional awareness for your brand, this is an opportunity area.

Best Practices for Bidding on Competitor Keywords

As usual, all SEM best practices apply. However, here are a couple of specific things to watch:
Bid Carefully
As mentioned earlier, Google will most likely tackle you on QS on these, so they’ll probably be more expensive. Beating out your competitors for position one on their brand will be difficult  I’d recommend, depending on how many competitors are in the space and bidding on a certain brand, shooting for around position 3-4 for a starting point, but this, of course, varies based the industry and your need.
Watch Ad Copy
When it comes to competitors’ terms, be extra-conscious of ad copy. Make sure you do a couple of searches on the other brand names. Note the selling points they are pushing, and line up some differentiating features.
Do you have even better price points? If they have price point ads, make sure to point that out. If you can’t compete with them in terms of price, but you have better service, draw attention to that. Make sure you see how your competitors are approaching their branded ads and think of why you’d be the better choice for the potential buyer.
Check out their landing pages
Make sure your landing pages are using all best practices. Check out your competitor’s landing pages – see if there’s anything (promo codes, customer service promises, video testimonials, etc.) on their landing pages that might have the extra oompf to close the deal. Like with ad copy, make the necessary tweaks to show why your product is the better choice.
Monitor the Keywords Carefully
As we mentioned many times, these terms tend to be expensive, so make sure they don’t begin to bleed the account. If they don’t start converting soon, look into why that might be (is it ad copy?  the landing page?).
For some clients, realize that bidding on competitor terms just might not work out. Make the best adjustments for your clients, based on your learnings. Also, keep a watch on the SERPs on your own terms – since your competitors might notice that you are appearing on their terms, they may soon begin to retaliate. Keep a watch on your own branded terms’ performance and make sure, in the end, this has positive ROI for your client.

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