Competitive Intelligence: A Gift Waiting to be Opened

It’s no exaggeration that the holiday season is “make or break” for many companies. As such, it’s critical that retailers and catalog houses maximize the impact of their paid search campaigns as the year draws to a close and competition for consumers heats up.

Thirty-five percent of retailers’ full year spend on paid search in 2011 was concentrated in the fourth quarter, with the top 50 largest retailers spending closer to 45 percent of their annual budget for search in those last three months, according to AdGooroo research (full disclosure: I work there).

To gain an edge this holiday season and better compete for consumers’ hard-earned dollars, search engine marketers (SEMs) need to leverage competitive intelligence. For the uninitiated, this means monitoring your competitor’s keywords, paid search spend, and ad copy with the goal of identifying and exploiting weaknesses in their pay-per-click (PPC) campaigns while enhancing the impact of your own.

The following are some specific methods for utilizing competitive intelligence to get a leg up during the holiday season.

Understand Shifts in the Holiday Marketplace

By definition the holidays are seasonal. And by extension, what was true in March or August isn’t necessarily true in November and December.

Products, features and fashions move on, as does the language itself and the terms that consumers use when they are searching. And gift givers shop differently than people buying for themselves. Therefore it is vital to understand and take advantage of shifts in consumer searching and shopping behavior.

Some advertisers reserve the majority of their marketing budget for the fourth quarter, so we see dramatic shifts in the spend of certain PPC advertisers in a given category as seasonal players enter the fray late in the year. In fact, AdGooroo research has found some seasonal PPC marketers, such as leading toy retailers, spent over 80 percent of their 2011 budget in Q4 of last year.

Identify Your Top Holiday Competitors

In practical terms, it is helpful to know the number of competitors in your category, as well as to identify those that are bidding on your most critical keywords, as this enables you to better understand how aggressively you should be bidding to win holiday traffic and how to allocate your search budget by ad group and keyword.

In addition to identifying your top-spending competitors, competitive intelligence will reveal which advertisers are winning in terms of coverage (i.e., the percentage of time their ads show up in search results), which is a strong indication of the:

  • Appeal of a company’s products.
  • Effectiveness of their PPC ads.
  • Relevance and conversion success of their landing pages.

Knowing this information enables you to focus your time and efforts on countering the competitors to whom you are most likely to lose traffic, which is particularly important during the short and highly competitive holiday season.

Know Your Competitors’ Holiday PPC Budgets

Competitive intelligence solutions can provide highly accurate estimates of your competitors’ click-through rates (CTRs) and average cost-per-click prices via sophisticated algorithms and computer simulation models. This enables you to budget appropriately for the holiday period. After all, the advertiser that blows through their budget before the end of each month is ceding the field to the other bidders until the next month when fresh budget allocation arrives.

Understanding the spend levels of your competition also provides important insight into the competitiveness of the marketplace. If your CPCs are rising, intelligence will reveal whether this is a market-wide phenomenon, or affecting your campaign specifically. Thus you can decide whether to bid more or revise your campaign strategy such as by shifting your focus to less competitive long-tail keywords.

It can also be beneficial to know where your competitors are spending their budgets and whether you can get a leg up by advertising on the “other” search engine, Bing/Yahoo. The graphic below shows retailers such as Best Buy, JCPenney, Staples, Kohl’s and Walgreens all ranking significantly higher (six or more positions) on Bing/Yahoo’s list of top spending retailers than on Google AdWords in Q3 this year.


View Competitors’ Holiday Ad Copy

Ad copy optimization is probably the easiest tactic to deploy quickly during the hectic holiday season. And since the search engines rely so heavily on CTRs to decide which PPC ads to display and in which position, improving your ad copy also promises to yield quick results.

Using competitive intelligence to review the ad copy of your more successful competitors is a shortcut to generating new copy and offer ideas for testing and implementation in your own campaigns.

Of course, you should have been conducting split testing of different ads well ahead of the holidays themselves. AdGooroo’s research of top holiday keywords in 2011 shows that CTRs began rising in October (up to 2.8 percent from a 2.6 percent average in the first three quarters of 2011) and peaked in November (at 4.5 percent). To have your optimal campaign copy in place when CTRs are peaking, you should ideally be conducting live testing in September.


However, all is not lost if you aren’t up to speed on ad copy optimization this year, as there are other benefits to viewing competitors’ ad copy during the holidays. Specifically, seeing their ad copy in near real time (which can be sorted by how often their ads are served, together with landing page URLs and the keywords which triggered their ads) enables you to stay on top of important changes in their tactics and strategies, including:

  • When competitors start their holiday search campaigns.
  • When their “Black Friday” deep discount promotions begin (it’s no longer exclusively the day after Thanksgiving).
  • The types of promotions they are running or testing (free shipping, percentage off, coupon codes, etc.).
  • Which products or brands they are promoting.

All told, these are just a few of the many ways PPC marketers are using competitive intelligence to maximize their search campaigns and beat their competition in the crucial fourth quarter.

Perhaps the real lesson for search marketers, however, is that you can’t simply concentrate on your own strategies and results and expect to thrive; you must look outward to understand the marketplace and your key competition. Those who don’t may just end up with a lump of coal this holiday season.

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