The Pros, Cons, Do’s and Don’ts of Competitor Keyword Bidding

Companies regularly bid on their own keywords, and generic terms related to their business, as part of their overall paid search strategy.  Bidding on competitors’ keywords (company name, brand names, product names, etc.) in paid search advertising is also a common practice. Google has allowed companies to bid on third party trademarked terms since 2008.  Plaintiffs have had an increasingly difficult time in recent years winning trademark infringement cases involving competitor keyword bidding.  Many companies appear to have adopted an “if you can’t beat ’em, join ’em” approach.  So should your company be bidding on competitors’ keywords too?

The answer, as is often the case, is, “maybe.”  There are many pros and cons to bidding on competitors’ keywords, and do’s and don’ts, to keep in mind.

  • PRO:  Bidding on competitors’ keywords targets your company’s market and promotes brand awareness.  Companies can use competitor keyword bidding to advertise to persons looking for similar products and services, helping to ensure your products are reaching the broadest possible market.
  • PRO:  Bidding on competitors’ keywords presents alternatives in the marketplace. Competitor keyword bidding helps ensure your company’s name and brand is presented as an alternative to someone searching for a competitor’s products.  This provides consumers with choices on available products and levels the playing field (especially when your competitors are bigger than you).
  • PRO:  Bidding on competitors’ keywords is often less competitive.  Competitors’ keywords are generally less competitive than generic terms, as fewer companies bid on them.
  • CON:  Bidding on competitors’ keywords could trigger a bidding war.  If your competitor isn’t already bidding on your company’s keywords, it may take an “eye for an eye” approach and start bidding on your company’s keywords, driving up your own paid search listing fees.
  • CON:  Competitors’ keywords generally result in a low click-through rate, which can have consequences.  The click-through rate (CTR) for listings triggerest by a competitor keyword can be low.  For Google, failing to achieve a strong CTR on an ad campaign can affect your company’s AdWords Quality Score (QS), driving up the company’s overall Cost Per Click (CPC) for paid search listings.
  • CON:  While litigation over competitor keyword bidding is unusual these days, it’s not unheard of if you don’t carefully follow the rules.

If you decide that the pros outweigh the cons and want to dive (or wade) into competitor keyword bidding, here are some Do’s and Don’ts to consider:

DO differentiate your company in the ad creative by including a clear offer or unique selling point to draw potential customers away from the company they were looking for.  Find a way to differentiate yourself and present a value proposition in your ad to get a potential competitor customer to look at you instead.

DO always mention your company’s name advertisements served via competitor keyword bidding.

DO check competitors’ keywords for alternate meanings (e.g., through Google Suggest and Google Search).  Other meanings could mean serving ads to persons searching for an alternate meaning, resulting in a low CTR.

DON’T use dynamic keyword insertion for a campaign involving a competitor’s keywords.  Not only is it a violation of Google’s AdWords policy, it can potentially expose you to trademark infringement claims.

DON’T mention a competitor’s name in your own ad copy served through competitor keyword bidding, or use it in a way that could cause a consumer to think you’re somehow associated with or sponsored by your competitor.

DON’T be deceptive, confusing or misleading, or make unsubstantiated claims, in your advertising creative or design (it’s never a good idea to try to trick someone into clicking on your ad).

Finally, DON’T try to outbid your competitors for their keywords.  Try to be #2 or #3 on the search results page to avoid a higher bounce rate and Quality Score impact.  Avoid starting a keyword bidding war — there’s never a winner, and the 1982 movie WarGames said it best (“the only winning move is not to play.”)

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