Why Bidding on Competitor PPC Keywords is Stupid and Costly

Introduction

When you’re looking to increase your business, one of the first places you might look is your competitor. After all, if they’re doing well then there must be something that you can learn from them, right? But bidding on competitor PPC keywords is a practice that can be quite costly and ineffective.

By targeting your competitor’s branded keywords, you are essentially targeting their customers – and this does not have a very high conversion rate. In fact, it often results in creating enemies within your industry, rather than generating interest from key audiences.

Why Turn Competitors Into Enemies

We are not saying that your competitors should be your best friends, but there is a big difference between a company being a rival and an enemy. By doing this, you’re basically going to war with another brand, possibly unprompted.

You may say that it’s just business, not a personal attack, so they shouldn’t get upset. Let’s flip the cards around and say that you, a business owner, searched your own brand’s name on Google and found your competitor’s ad popping up alongside your own, maybe even above your own links. Yeah, not ideal. It may even prompt you to lash out and bid on their business name. If they want to play this game, then you can play too.

This can lead to an all out bidding war, where both entities allocate spending ad money to appear on SERPs mentioning their competitor’s name. Eventually it will either become too cost prohibitive or simply go so high that neither will be able to fund the effort anymore. By that time, the damage might already be done.

  • At best, you may just leave some opportunities on the table by pursuing the bidding war.

  • At worst, you could see your cost per sale skyrocket, and have to navigate through a mutually awkward cease-fire where both companies have to agree to stop bidding on each other’s keywords.

Bidding Competitor Keywords to Enemy Building
Bidding Competitor Keywords Affects Reputation

It Can Actually Harm Your Reputation

As you can see, many do not take kindly to bidding on branded terms. This doubles down when it runs up against copyright or trademark, which can cause much bigger headaches than a high CPC rate if you are not careful. Beyond that, if these people are your direct competitors then there’s a high likelihood that you will need to interact with them at some point, and coming into any kind of negotiation or even conversation is going to be made far more difficult if there is already bad blood between you.

Even if that doesn’t bother you, let’s think about it from the viewpoint of a customer. If you are searching for a branded term, it’s most likely because you are looking for that specific brand, not just someone who sells a product. You have probably already deduced that you are interested in this brand, and so if you go to click on what you think is the company website only to arrive at another website, you’re not going to be happy. People don’t like to feel tricked, and that is essentially what you are doing when you practice these techniques. It colors your business in a certain light that you may or may not appreciate.

It’s All About The Money

At its core, Marketing is about using tactics to get people through the door in order to purchase goods and services. That’s why we do all the research and planning and analyzing. We want our brand to be successful, and for that success to come as quickly and as easily as possible. 

At the beginning, a bidding war may seem like just another way to squeeze out some profit via your competitor’s SERP page. For a while, it may work. You may get some good click through rates, and even make a few conversions. The long run, however, you may find it a bit less profitable. Over time, the searchers get wise and your CTR will drop, downsizing your quality score and driving up the CPC rate for both you and your competitors brands, meaning that as this goes on it will become increasingly expensive to maintain your PPC campaign.

Google isn’t dumb – they know that when a person puts in a branded search request, they are probably looking for that brand. Google as a company is always going to prioritize their searchers. That’s just how they choose to operate, and if they think that you are doing something on their system to try and trick or deceive searchers, they are going to do everything they can to diminish and dissuade you from continuing. 

This starts with a lowering of your quality score, which is basically the way that Google’s system ranks your website or landing page against key search terms. If you aren’t aware, the quality score is a major factor in the google ads auction. If your quality score dips too low or becomes “below average” then you might find yourself shelling out major bucks just to stay on the front page. As you can imagine, this gets expensive very quickly, and at some point, you (or your finance department) will have to take a serious look at the numbers and decide: is this worth it? Personally, we don’t think so.

Conclusion

We’ve shown you a few reasons why we think that bidding on your competitors serves no one. We at Allegiant want you to be aware that none of this is intended to be legal advice, and we recommend if you do decide to move down this path that you bring your attorney and your team in VERY tight.

If you are interested in learning more about Allegiant Digital and all of our digital marketing services, please feel free to connect with us HERE to get your free ARC report. We can’t wait to get to know your business.

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