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Using Competitive Intelligence In Paid Search
by Richard Stokes
Paid Search advertising has experienced a ten-fold growth in the past four years and now comprises over 30% of all online marketing activity. Yet despite the effectiveness of this medium, online advertisers are now facing stiffer competition than ever before and are making increasing use of more sophisticated marketing strategies to gain a competitive advantage. In this article, we’ll take a closer look at some of the strategies made possible through the use of paid search competitive intelligence.
Why Paid Search
Simply put, paid search works. Google and Overture advertising have proven to be even more cost effective than email marketing. As a result, advertisers are flooding the space, now spending over $3.3 billion a year, up from $300 million just four years ago.
Yet, the increased competition is eroding the effectiveness of the medium and forcing advertisers and agencies to make use of more sophisticated marketing strategies in order to remain profitable. While marketers in other mediums traditionally turn to competitive intelligence to help formulate these strategies, until recently, there were no firms offering these services to search marketers. The first firms to begin exploring this area have already begun reaping substantial economic rewards.
Aside from the need to deal with rapidly increasing competition in this space, there are other benefits that arise from intelligent application of competitive intelligence.
Paid search advertising tends to be evaluated in quantitative terms. This is part of the attractiveness of the medium. Advertisers have less uncertainty to deal with in paid search than with most other forms of marketing. They can immediately measure their return on investment using media metrics such as cost per click, cost per acquisition, conversion rates, and so forth. However, this purely mechanical approach overlooks a wealth of marketing information that is available from a thorough analysis of competitors’ paid search campaigns. And because very few companies are presently making use of this information, it directly translates into competitive and economic advantage.
For example, some of the questions left unanswered by the current offering of paid search tools are:
- What percentage of online searchers are seeing my ads?
- How much are my competitors advertising?
- What new competitors have recently entered my industry?
- What new campaigns have my prospects or competitors launched in the past week?
- Am I making better use of paid search than other advertisers?
- Have they changed their ad copy over time? Why?
The companies who find the answers to these questions have a major advantage over the competition. Let’s examine some real-world scenarios in which companies are making use of competitive intelligence to deliver value to themselves and their clients.
Win New Business
A client of ours, a large online agency specializing in paid search is currently using paid search intelligence to get the edge over their top competition when pitching new business. While their competitors pitch new business solely on their track record, services, and price, our client walks their prospects through an overview of the current advertising landscape within their industry. Their pitch includes:
- The number of advertisers in the space
- A gauge of how competitive advertising within their space truly is
- Who the top advertisers are
- Specific recommendations on how to beat them
Needless to say, clients walk out of this agency’s pitches wanting to hear more. The agency looks like they did their homework, and they’ve delivered valuable information to the customer before the first contract is ever signed. The end result is that they are winning 10% more of their pitches to large corporate customers than they were before.
Answer Strategic marketing questions
It’s not enough to win new business. You have to keep the business you already have. Another media placement agency is doing just that. They are using competitive intelligence to answer their existing clients’ questions about their online campaigns that they could never answer before. For instance, one client wanted to know why their online sales had experienced a precipitous drop. Using an industry map of the client’s advertising space (which they generated in less than 24 hours), they were able to determine that three new competitors had entered the market in the span of two weeks. The agency demonstrated that they could provide their client with answers and strengthened their relationship with them.
Explore new markets without committing to them
Sunbelt Software, an international software company specializing in infrastructure and security tools, makes use of our service to map out the competitive landscape prior to entering new markets.
Build Distribution Channels
Aluria Software, a leader in the anti-spyware market, uses our service to identify and develop relationships with online software resellers. These potential business partners have proven to be an important source of top line growth in a highly competitive industry.
Find Trademark Infringement
Another client, an online travel company, advertises on over 100,000 Google keywords. A campaign of this size requires full time marketing professionals who are responsible for managing all aspects of the campaign. Among their other duties, these campaign managers are frequently contacted by affiliates and business partners to remove trademarked terms from their ads, a task that used to take days of tedious, manual searching. It can now be completed in just a few minutes using trademark search reports. These reports scan all ads for specified terms and return a list of ads which are quickly located and corrected.
Conclusion
In short, competitive intelligence is an important weapon in the marketer’s arsenal, and in a young industry such as paid search advertising, there’s a short window of opportunity for many companies to make abnormal returns from the intelligent use of competitive information.
Copyright © 2004 by Richard Stokes, All Rights Reserved. Reprinted by Permission.
No part of this article may be duplicated without express permission from the author.
Richard Stokes is the founder and President of AdGooroo, the world’s first competitive intelligence service for paid search advertisers. AdGooroo tracks the competition and empowers advertisers and agencies, allowing them to base decisions on facts and thoroughly beat the competition. Richard’s previous experience was at Leo Burnett and he holds an MBA in Marketing from the Kellogg Graduate School of Management.
For more information, visit AdGooroo at the December Search Engine Strategies Conference in Chicago, visit us at http://www.AdGooroo.com, or email us at sales@adgooroo.com.
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