Google AdWords: bidding on competitor's keywords

Google, I love it. Everyone around the world knows and uses it. In fact it's a large part of my role here at InfoTrack. Recent studies suggest that over 65% of the world's searches are done with it. With global advertising costs hitting around $600 billion in 2016, $13.5 billion in Australia and set to rise, it's no surprise that Google has made an impressive business out of its own advertising service (known as Google Adwords).



In a nutshell, Adwords is Google’s innovative paid advertising product where advertisers only have to pay whenever someone clicks on the ad. These are targeted by keywords associated with what people are searching for. This is known as cost-per-click advertising (CPC).

So what happens when companies use Adwords to bid on competitors brand key words?


Whether you can use a competitor's name as a keyword depends on the circumstances surrounding the keyword. If it's a copyrighted or trademarked term, then usage is regulated, by the applicable laws of the country or region. In a media release in 2013, Google announced that, in Australia, competitors are not prevented from bidding on third party trademarks. Google policy is that if you're not using a trademark in your ad text, then you're not doing anything illegal. So, whilst it is not illegal in Australia, does that mean you should still do it?

In general, bidding on the competition tends to favor smaller companies without an established brand. Nobody knows who you are, so you can piggyback on the competition’s name and success without putting yourself at much risk. However, for larger companies, especially in B2B, you need to weigh up how you want to be perceived in the market and the cons associated with this form of marketing.
Here's just a few of my thoughts on why you shouldn't do it.

Low quality scores, low CTR, low conversions and poor user experience


Quality Score is Google's rating of the quality and relevance of both your keywords and PPC ads. It is used to determine your cost per click (CPC) and multiplied by your maximum bid to determine your ad rank in the ad auction process. Quality score depends on:
- Your click-through rate (CTR).
- The relevance of each keyword to its ad group.
- Landing page quality and relevance.
- The relevance of your ad text.
- Your historical AdWords account performance.

As you can probably ascertain already, if a prospect is typing in your competitor's brand name into Google, then the chances are high they have already made their purchase decision or are an existing customer. This means that your ad copy, no matter how clever you think it is, will not be enough to give you a good CTR. Given the average click-through rate on AdWords is about 2%, your CPA (Cost Per Acquisition) on a competitor's brand name will be through the roof, plus the CTR will be going in the opposite direction.

The relevance of this keyword to your landing page and ad group is also going to be scored extremely poorly. Can you see the flow on affect this has? It will certainly start affecting your other ad campaigns as your historical Adwords account performance will be deemed as poor. This drives CPC and CPA up and costs you more money as well as reflecting poorly on your brand in some instances.

It’s important to remember that if someone is searching for a brand, they not only know what they want but who they want it from. In these cases, it is not you or your services they want. Quite simply, what bidding on competitor’s brand names doesn't do is put the user first. Ultimately people use search to find information or answers to a question.

Providing searchers with irrelevant PPC ads will...

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