Competitor Bidding Generated +59 Sales Last Month, BUT…

Competitor bidding is often viewed as a straightforward way to scale a Google Ads campaign. For instance, it delivered an additional 59 conversions in a single month for one of my e-commerce clients. However, despite its potential, this strategy comes with several complexities and pitfalls that demand careful consideration before jumping in.

In this guide, we will:

1. Explore the advantages of competitor bidding.
2. Examine its potential disadvantages and risks.
3. Discuss how to implement this strategy effectively.

What is Competitor Bidding?

At its core, competitor bidding involves targeting keywords related to your competitors’ brands or business names. The idea is simple: by appearing alongside your competitors on the search results page, you can attract some of their traffic. Often, users searching for a product or service may not pay close attention to the brand name, clicking on your ad instead and potentially converting into a lead or sale.

This approach has been tried and tested by many advertisers, but its success hinges on a balanced understanding of both its benefits and drawbacks.

Advantages of Competitor Bidding

1. Scaling Your Campaign

Competitor bidding is a powerful way to grow your campaign when you’ve already maximised your core keyword performance. There are five primary methods to scale a Google Ads campaign:

• Increase your budget: Particularly if you’re using smart bidding, increasing your budget is often a low-risk way to drive additional results.
• Adjust CPA or ROAS targets: Opening up your CPA (cost-per-acquisition) target allows Google to bid higher for more conversions. Similarly, loosening your ROAS (return-on-ad-spend) target can yield higher conversion volumes.
• Expand your geographical targeting: While effective, this method might not always be applicable if you’re already targeting all relevant locations.
• Enhance click-through rate (CTR): By improving ad quality, you can capture a larger share of available clicks. (Refer to my previous guide for tips on optimising CTR.)
• Add new keywords: This is where competitor bidding fits. By incorporating your competitors’ brand terms, you can access an untapped audience, driving additional conversions.

2. Cost-Effectiveness

In many cases, competitor terms are cheaper to bid on compared to core keywords. Based on my experience, competitor keywords often have a lower cost-per-click (CPC), making them an attractive option for scaling campaigns.

3. Increased Visibility

Appearing alongside your competitors helps increase brand awareness and potentially redirects traffic that would otherwise go to them. This added visibility can be valuable in competitive industries.

Disadvantages of Competitor Bidding

Despite its benefits, competitor bidding has some significant downsides.

1. Lower Conversion Rates

While CPCs may be lower, competitor keywords often have reduced conversion rates. This is because users searching for a competitor are likely interested specifically in that brand, not yours. If the traffic quality doesn’t align with your goals, this strategy could become inefficient.

2. Retaliatory Bidding

Launching competitor campaigns can provoke retaliation. If your industry doesn’t already practise competitor bidding and you start doing so, competitors may respond by targeting your brand name. This could force you to defend your brand by launching your own branded campaign, increasing your costs.

3. External Retaliation

In some cases, retaliation extends beyond Google Ads. A competitor might escalate matters outside the platform, leading to potential legal or reputational issues. Be particularly cautious if you suspect any competitors might react aggressively.

4. Trademark Risks

Using a competitor’s brand name in your ad copy is a common mistake that can lead to serious consequences. If their name is trademarked, they can:

• File a complaint with Google to have your ads removed.
• Pursue legal action, which could result in costly penalties.

Best Practices for Competitor Bidding

To succeed with this strategy, follow these key steps:

1. Avoid Using Competitor Names in Ads

Under no circumstances should you include a competitor’s brand name in your ad content. Whether through dynamic keyword insertion or manual input, this practice is both legally risky and ethically questionable. Instead, focus on highlighting the unique value your business offers.

2. Segment Competitors by Size

Competitors can be categorised into two groups:

• Small businesses: When targeting local or niche competitors, simply bid on their brand name. The overlap in audience is often sufficient to generate relevant traffic.
• Large, global brands: Household names like IKEA or Wayfair require a more nuanced approach. Broad targeting can quickly exhaust your budget, so it’s better to focus on modified terms (e.g., “IKEA wardrobes” instead of just “IKEA”). Pairing broad match keywords with smart bidding can also yield results by targeting user intent rather than specific phrases.

3. Use Negative Keywords Strategically

Preemptively add negative keywords to filter out irrelevant traffic. For instance, exclude terms like “login,” “contact,” or “head office” that indicate non-converting searches. This refinement ensures you’re only targeting high-intent users.

4. Separate Campaign Structure

Create a dedicated campaign for competitor keywords. This allows you to:

• Adjust CPA or ROAS targets independently from your core campaigns.
• Monitor performance separately to assess the true impact of this strategy.
• Optimise bidding and budget allocation without affecting your primary keywords.

5. Leverage Broad Match Keywords with Intent

Broad match keywords have evolved significantly, now focusing on user intent rather than exact phrases. When targeting large, generic competitors, using broad match with smart bidding can help you capture high-intent traffic. For instance, Google’s algorithm can discern whether a user searching for “IKEA” is looking to purchase furniture or merely checking store details.

6. Monitor and Adjust Regularly

Competitor bidding campaigns often require more frequent monitoring than standard campaigns. Conversion rates, CPCs, and user behaviour can vary widely, so regular performance reviews are essential. Adjust your bidding strategy, negative keywords, and ad copy based on the data.

7. Emphasise Unique Selling Points (USPs)

In your ads, focus on what makes your business stand out. Highlight your unique offerings, competitive pricing, superior customer service, or exclusive deals to entice users away from competitors.

A Word of Caution

Competitor bidding requires a strategic mindset. If not implemented carefully, it can backfire both financially and relationally with industry peers. Consider the potential risks and rewards thoroughly before proceeding.

Conclusion

Competitor bidding can be a powerful tool in your Google Ads arsenal, offering a cost-effective way to scale your campaigns and increase visibility. However, it’s not without its challenges, from retaliatory actions to legal risks. By following the outlined best practices and tailoring your approach based on competitor size and user intent, you can harness the benefits while mitigating the downsides.

Is competitor bidding part of your current strategy, or is it something you’ve been hesitant to explore? Share your experiences and thoughts in the comments below—I’d love to hear from you. If you found this guide helpful, don’t forget to subscribe for more insights on optimising your Google Ads campaigns.