Competitor brand bidding in the search landscape

Some paid search advertisers pursue competitor brand bidding – the process of bidding on different competitor brand terms to acquire a similar audience to your own – as a campaign strategy to gain more conversions at a relatively low cost-per-acquisition (CPA).  However, if not managed correctly this activity could risk further aggravating relations with competitors that will spark an ugly and costly bidding war.

Why competitor brand bidding might work

It is not uncommon for some advertisers to actively bid on their competitors’ brand terms as some elements of this strategy can help achieve campaign goals:

  • Similar audiences: As you offer similar products/services to your competitors, the profile of users who search for your competitor will closely match your target audience. Furthermore, your ad copy can be tailored to focus on a particular USP you have that will provide an incentive for the user to click on your ad instead.
  • Cheap cost-per-click (CPC): Branded keywords are generally much cheaper to bid on than generic keywords as traffic volume is lower and fewer advertisers are bidding on those terms.
  • Brand awareness: Even if users do not click on your ad, you will have received free advertising for your brand in this landscape. It is possible that if the user cannot find what they want from your competitor, they will then search for your brand in the future.

At Croud, we tested a competitor bidding strategy for one of our finance clients and found that not only did it result in more conversions but also a lower blended CPA across all non-brand activity.

66% extra conversions from competitor campaigns:

17% lower blended non-brand CPA from competitor campaigns:

Useful tips before starting

It is essential, however, to exercise caution – just because competitor brand bidding might work well in one environment, it is not always wise to be pursuing such a strategy.    

If you start bidding on your competitor’s brand keywords, there is a good chance they will react and bid on your own brand keywords. Such a bidding war will result in your own brand’s CPCs increasing, meaning you will have to bid more on your brand keywords just to stay in the top position of your brand’s search engines results page. Things could turn ugly very quickly.

Below are some steps to help you form a prudent strategy before embarking on competitor brand targeting:

  • Research competitor search terms to see which other brand ads appear. If one competitor brand appears quite prominently across multiple competitor search terms – including quite possibly your own – this might indicate they have plenty of budget to pursue an aggressive competitor bidding strategy. It might be best to avoid bidding on this particular competitor as this might trigger them to bid more intensely on your own brand terms.
  • Do not use the competitor’s name in your ad copy especially if their brand is trademarked as Google will disapprove the ad for trademark infringement. You will not be penalised by Google if you bid on the competitor’s brand term, however, bear in mind that the quality score will be lower due to poorer ad relevancy and conversion rate will also be low.
  • Ensure your ad copy for your own brand search term follows best practices. This should be straightforward as you have the great advantage of being able to include your own brand terms in your ad copy. Along with a relevant landing page which loads quickly and efficiently across multiple devices, you can easily achieve a quality score of 10. Should a competitor bid on your brand’s search landscape you are still very likely to be in position 1.
  • Start by bidding on “alternative to competitor” themed keywords. Search terms like “alternative to Brand X”, “site like Brand X” or “Brand X reviews” might be more valuable to you. Why? A user who enters such a search query is specifically looking for an alternative brand that offers a very similar product or service to the original competitor. Not only will click-through rate likely be higher, but you can also take advantage of the user’s potential misgivings on the competitor by tailoring your ad copy to capture a USP that demonstrates why what you offer is better than your competitor.

If you would like to find out more about competitor bid targeting strategies, contact us.

by Croud
19 December 2018



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