Introduction
From time to time, you’ve probably asked yourself, “Is there a way to estimate the paid search spending activity of my competitors?” You probably wanted to understand which of your campaigns are being challenged and at what times. It's valuable to have this competitor insight as it can impact your paid search bidding, budget distribution strategies and allow you to make more tactical decisions toward optimisation and higher ROI.
While there are several third-party tech companies on the market that can provide you with such insights, our experts find more value in utilising our clients own data sources.
The approach
You may be aware that the AdWords Auction Insights tool provides brands with a good starting point for monitoring competitors’ activity. The iProspect Data Intelligence team has recently found a new way to enhance the insight provided by this tool. By combining the tool's insights with our client’s own historical performance data, we are able to run statistical models to gain an unprecedented understanding of bidding activity in the market.
Results from a handful of client tests exceeded our initial expectations. Instantly, we could spot not only moves in Average Position and Impression Share, but also the number of clicks or impressions those competitors are likely to obtain while competing in the market. Combining all of these datasets together provided us with robust insights on how clients should approach their adversaries in the market.
Application
So, how would you actually take action from this knowledge?
Case A
Imagine that your campaign's ROI is degrading due to the increased costs and you need to make a decision to pause this campaign or continue to increase your spend. Knowing your competitor's cost behaviour can really help in this situation. If the competitor had a historically higher Spend, Impression Share, and Average Position, then chasing their bids is probably not a good idea.
Historically, Competitor 1 spends more and when we saw an increase of cost due to seasonality - while our revenue level remained the same - we decided not to compete.
Despite Impression Share increase, we still could not beat Competitor 1 nor Competitor 2 hence leaving the competition was the right decision.
Case B
However, if your competitors are still spending less than you, and a spike in spend is not something that you usually see, then you can simply increase your bid and try to push them out. Of course, this will make your costs rise for a time period. However, you are likely to increase costs for your competitor and soon enough, they may drop their bids, disappear from the competition or even leave the top position. The result: the greatest piece of Impression Share is now yours.
As you can see, Competitor 1 has significantly increased bids between the 8th and 9th of July. In this case, we decided to increase our bids since this was a campaign with an historically high ROI. On the 11th of July, Competitor 1 decided to stop competing with us for this campaign and decreased spend.
Since Competitor 1 increased bids between the 8th and 9th of July, we started to lose Impression Share. However, after we increased bids, we secured our Impression Share and pushed Competitor 1 out of the competition.
Conclusion
A better understanding of your competitor's market behaviours can really help you make better decisions on KPI optimisations as well as help you find the right equilibrium between a High ROI and a High Revenue approach. This paid search data solution and methodology developed by iProspect allows for paid search teams to make the most out of a client’s budget by
- engaging in more complex analysis of the search market
- implementing more tactically-targeted optimisation decisions
- reacting more quickly to the activities visible within the market on a regular basis
