Is PPC Competitor Bidding Right for You?

By now, most PPC professionals have likely seen the recent discussions around brand and competitor bidding. Everything started with this tweet from Jason Fried, founder of Basecamp:

In addition, Jason posted on LinkedIn berating Google’s allowance of competitor bidding:

The resulting conversation ensued into a mix of agreement and disagreement from a broad spectrum of individuals.

To Bid on Competitors or Not to Bid?

So, should Google allow brands to bid on competitor brand names? Given the fact that competitor bidding IS currently deemed OK by Google’s current guidelines, are brands being unethical by engaging in the practice? Let’s explore the issue.

Is competitor bidding inherently unethical? First, understand that Google guidelines do NOT allow you to use a trademarked brand name directly within your ad copy.

You can bid on your competitor’s brand name when somebody searches for it, but your ad must clearly represent your brand. Google allows users to report any ads that employ deceptive practices in violation of policy.

Kirk Williams offered a helpful analogy in this LinkedIn post:

Essentially, competitor bidding presents alternative options when someone searches for a brand name. This tactic differs little from age-old conquesting tactics in traditional advertising. You’re not deceiving the user; you’re simply giving them another choice.

When deciding to test competitor bidding for your company or clients, think about keyword variants that indicate a user is in a research process, particularly when going up against established brands with high search volume. A brand name search can entail a wide range of intent, from users in an initial stage comparing options, to existing customers simply seeking to log in.

Curating a list of brand name keyword variants can help to cover the intent you want. For instance, if you were marketing your new word processing software, you could try targeting phrases such as “Microsoft Word alternatives,” or “Microsoft Word reviews” instead of simply bidding on any mention of “Microsoft Word.”

Ultimately, look at the return you’re getting from specific keywords to determine which ones are worth continuing to bid on. Keep an eye on search term reports, both for finding new keywords to bid on and informational queries that are eating up spend while not performing. For instance, when bidding against a software company, you may find a lot of “login” and “support” queries showing up that indicate a user is already an existing customer and past the research stage.

Competitor Bidding to Build a Brand

Particularly when trying to build awareness in a new market, some companies find themselves limited in nonbranded search keywords that relate to their products. Or their main search keywords are incredibly expensive, raising the barrier for entry to the market.

Bidding on established competitors can help to zero in on people researching products in your market, and can potentially bring in high-quality prospects. Competitor keywords can also sometimes be the most accurate terms to differentiate B2B from B2C intent.

On the downside, competitor keywords may not necessarily have a lower CPC than nonbrand terms, particularly in industries where several players have caught onto the concept. Conversion rate might be lower, too, since inevitably you won’t weed out the people who prefer the brand they actually searched for.

In addition, be mindful of bid wars. When competitors see you bidding on them, they may start bidding on your brand name, and a vicious cycle can result in everyone’s brand keywords becoming more expensive all around. Unfortunately, Google doesn’t give brands as big of a break on their own brand CPCs as in the past, and your own brand CPC will suffer if competitors keep bidding on it.

In some cases, brands will reach a mutual agreement to not bid on each other’s names. This tactic can be beneficial for both parties when in a high CPC space; however, be mindful of potential regulations impacting this type of arrangement. The FTC ruled against 1-800-Contacts as engaging in anticompetitive practices for involving itself in similar agreements with competitors (hat tip to Kirk Williams for calling this out).

At the end of the day, test and look at the data to determine if competitor bidding has been right for you. Even if initial CPAs are higher, I’ve often seen leads from competitor searches be more qualified and tend to be more likely to convert to paying customers.

The Conclusion of the Matter

Yes, the current state of the SERP fuzzies the line between ads and organic listings. A four-pack of ads pushes down organic results to the point where they often don’t show up before scrolling in mobile.

These points bring up valid concerns about Google’s de facto monopoly on the search market and their accountability to users. But at the end of the day, customers are going to make a decision based on the experience they have with your brand beyond the click.

If a company decision maker decides that competitor bidding isn’t right for their brand, they’re free to stay away from that decision. However, with the current state of the search market, be aware that competitors are likely to take advantage of bidding on you, whether you bid on them or not.

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