I was watching Nightly Business Report last night and they reported that Best Buy was launching a musical instrument department within their stores. The report got me thinking about search, specifically, how to deal with a new competitor enters the marketplace.
First, let’s take a look at some things that happen when a new competitor decides to start bidding on your terms. When a new advertiser enters the search space they will be “feeling out” the market and their bids on their keywords won’t be at optimized levels - some will be lower than they should be for some keywords, and higher than they should be for others. This will put some of their ads above yours which may end up lowering your CPC but will provide less traffic volume to your site. For other keywords, you may end up paying more for the same position or your CPC may remain constant while your position will fluctuate bteween your usual position and lower positions. More than likely, the changes will be an average of all of these making the overall impact less noticeable on a micro level, but on a overall level, you will most likely see the affect in your metrics. What makes an analysis of these types of situations even more difficult is the dynmaic nature of search. Since search doesn’t take place in a vacuum, your other competitors and even the users are having an affect on bids, positions, conversions etc.
How Do You Deal With the New Competitor?
Short Term Strategy
There are a few strategies you can use to help counteract a new competitor.
- Aggressive Bid Optimization
Watch your top keywords more carefully than usual. Make sure that you are making your campaigns as profitable as possible and any “waste” is taken care of ASAP. While you should already be doing this, take the time to spend extra time on it to make sure you can maximize your conversions at the same or lower ROI. You may also want to implement dayparting, geotargeting or other tactics in order to be able to compete with your new rival. - Perform an Account Audit
Similar to the above, but this includes your URLs, creatives, budgets, etc. Do some house cleaning to ensure everything is in tip top shape. Your messaging is still up to date and accurate, all the URLs are being sent to the correct pages, and you’re not missing any keywords just to name some of the bigger ones. - Raise Your CPCs
If you’d like to take a very aggressive stance against your competition, one strategy to use is increasing your CPCs as much as you can afford to. Why? Being a veteran in your niche, you should already know which keywords are the performers and which aren’t - remember, your new competitor doesn’t. This gives you the ability to fiddle with their metrics a bit. Depending on how similar the competition is to you, raising your bids can either raise costs for the new guy or keep the competition from showing up higher than you, reducing the conversions they see on their end. For verticals with only a handful of volume driving keywords, this type of tactic will work better than in other verticals.
Long Term Strategy
The long term strategy probably doesn’t differ much from a regular long term strategy, however, the specifics may be more directed at the new competition.
- Testing
Landing page tests, creative tests, keyword tests, engine tests, etc. Anything you that may help provide more volume or greater ROI, you should be testing. - Analysis
Analyze the marketplace, trends, results. Seeing the impact of a new competitor or just changes in the marketplace is important in knowing which tactics and strategies to use to successfully manage your campaigns. - Think Outside the Search Box
To maintain long term competitiveness (and dominance), you need to make sure that the product you are marketing is either the best or at least competitive to the other advertisers. If you have the power to do so, make sure your the other areas of your client’s/company’s business are staying ahead of the curve. If you start noticing pricing changes, product changes, sales or other changes within search, you should be bringing it to the attention to whomever can make the necessary adjustments within the overall business strategies. If you’re working for a client, bringing up news and/or updates on their competition shows them that you are paying attention to their account and also that you’re showing extra interest in their industry.
Having a new competitor enter your space can affect your whole search strategies and the ways you implement them. Some new entrants may not have much, if any of an affect on your vertical. If you see a new small player testing out the space, using some of the above tactics can help keep convince them that search won’t be profitable for them (when it may in fact be very profitable). However, if you have a new competitor, like Best Buy entering your niche, look to make long term strategy changes to maintain competitiveness. I’m sure that Music 123 and other insturment shops are reworking their long term strategies after hearing the news about Best Buy - or at least they should be.
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