The Cases For and Against Competitor Brand Name Bidding

To bid, or not to bid (on competitors’ brand names). That, is the question, that we cannot get away from, ever, it seems.

In pay per click marketing, we’re commonly presented with a dilemma when clients ask to run competitor campaigns. That is, SEM campaigns where we bid on their competitors brand name keywords. For example, if Joe’s Car Wash asks us to run ads when consumers search for his sister’s car wash, Jane’s Car Wash.

It’s not only clients who bring this idea to the table though. We as search marketers do it to ourselves. For me, it’s usually because we’re trying to find more scale or lower costs per conversions, improve ad ROAS (return on ad spend), etc.

And since search ad networks such as Google and Bing fully allow this behavior, what’s a business to do?

Typical Competitor PPC Campaign Structure

Let’s begin by understanding how competitor campaigns are typically run. For this, let’s go to work on behalf of Joe’s Car Wash and we’ll run a campaign on his competitor, Jane. Our goal, tell people about how Joe’s Car Wash is a great alternative to Jane’s.

Advantages & Disadvantages of Competitor Keyword Campaigns

Let’s look at some of the considerations which we think are relevant for determining whether or not to bid on competitor brand names.

Campaign Efficiency and Inefficiency

In our experience, and only in some cases, competitor brand name bidding can be a very efficient way to general leads. When boiling down campaigns to important KPIs (key performance indicators) such as ROAS (return on ad spend), CPA/CPL (cost per acquisition/lead), etc., the numbers tell a story.

• The Efficiency Story: We’ve seen situations where there is clear quantitative evidence that running these campaigns is as or more efficient than typical prospecting campaigns and also provide additional scale.
• The Inefficiency Story: In other cases though, the data clearly suggests that costs per conversion are far less efficient when bidding on competitor keywords. That is, generating new lead is must more costly in terms of ROAS.

Here’s a sample campaign:

Note both the volume (helping with scale) and Cost/Conversion of our Competitors (Geo – EN) are within check and we may likely continue running these ads, all other things equal. Not all competitor campaigns perform this way.

Branding Considerations

Next, let’s consider the argument for branding. If your business is new in town or simply not as well-known, the idea behind keyword bidding is to make consumers aware of your brand when they are searching for your competitors. Basically, let them know you exist and encourage them to give you a try.

Now we could leave this argument alone, but recently came across an interesting and related  study authored by Preyas S. Desai, Woochoel Shin, and Richard Staelin.

The short is this:

• In cases where the consumer considers both brands to be similar (similar brand quality/equity), brand name bidding can be successful in presenting the brand as a good alternative.
• In cases where the consumer has a clear opinion that the brand (whose name is being bid on by a competitor) is much stronger than the inferior brand (who is doing the competitor bidding), the opposite effect can occur. That is, the consumer can hold an even lower opinion of the inferior brand, or will at least have the impression that the difference between the two brands is even greater.

This consideration is one which is extremely hard to quantify at small brand levels (remember the car wash example above) but nonetheless, worth noting. Even if the costs are in check, there could be a negative impact on brand perception if your brand is considered inferior to the competitor whose name you bid on.

Poking the Hive

Another consideration is simply whether you want to poke the hive or not with your competitor. That is, if competitors in a space are not currently bidding on each-other’s brand names, then all is fine. However, as soon as one bids on the other’s name, a mindful competitor will do the same and thus, both will need to continue. This scene from A Beautiful Mind provides the best explanation of this loose example of equilibrium theory.

Niche/Industry Specific Considerations

As search marketing tacticians, we’ve attempted competitor brand bidding enough to know that it seems to work in some industries, but not others. For the most part, if one product/service is easily exchangeable for another (cases where the brand selling has less importance), it seems more feasible.

If there are two car washes, near one another, and seemingly the same otherwise (maybe to do with brand perception from the study mentioned previously), almost a no-brainer to try this bidding strategy.

If there are two doctor offices, the consumer relationship is much deeper and thus, switching to a new brand (aka doctor), less likely. Maybe not ideal to try to steal patients from another practice, at least with this method.

We asked Woochoel Shin about this specifically because we wanted to know whether the study took industry into consideration.

His response, “Definitely, the effect differs industry by industry. It is because the profit margin generated from one click is different across categories and also because … consumers’ perception of the difference between brands is different. The key is whether consumers perceive the two brands similar or different before seeing them together in the search results page. If the former (similar), the two brands seen together will be assimilated; if the latter (different), they will be contrasted and thus perceived to be more different than they actually are.”

And from the tactical point of view, we believe that the industry/niche at-hand could possible be a very strong factor, at least in ways which we can more easily quantitatively measure at smaller scales.

Data Considerations & the Importance of Qualitative Reviews of Lead Quality

Let’s pull our heads out of the sand and consider this- Even if the raw data from a competitor campaign suggests the efficiency  and scale that we spoke about above, is it possible that the data is misleading?

Consider this real world car wash scenario. Let’s assume that a consumer named Bob searches for janes car wash and Joe’s ad appears (cause Joe is running a competitor campaign). Now Bob is only half paying attention to the SERPs (search engine results) because he’s driving down the street with screaming kids in the car. He just clicks a call-only ad for Joe, thinking he’s calling Jane to complain about his recent car wash.

Quantitatively, we marketers are tracking phone calls and consider this a success. Bob called after all.

However, qualitatively it’s really not at all a success at all as when Bob is connected on the phone, he realizes he’s called the wrong business and hangs up.

Simple Approach to Competitor Brand Name Bidding

At Lean Digital Advertising, simple is always best! Maybe this workflow helps you decide:

1. Is your product/service truly an easy replacement for that of your competitors (quality, price, perception)? If yes, go to step 2. If no, maybe reconsider.
2. Are you willing to stir the pot (that is, do something that causes your competitor to bid on your brand name too)? If yes, see step 3. If no, reconsider.
3. Can you efficiently generate new leads from competitor campaigns (consider KPIs link CPA/CPL/ROAS)? If yes, go to step 4. If no, reconsider.
4. Is the quality of the leads generated from your competitor campaign good (can you listen to calls, track conversions from lead to customer, etc.)? If yes, bid away!!! If no, reconsider.

Do you bid on competitor brand names? Comment below with your thoughts!