Allows Google to bid on competitor keywords

Competitive Keywords In Google Ads: Why You Shouldn't Bid On It

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With a handful of arguments we want to show you why we at mindshape advise against bidding on the brand of the competition.

Whether it's a brand name or a product name - using the keywords of the competition in your own Google Ads campaign (formerly Google AdWords) is tempting, but rarely turns out to be recommendable. Because it is possible to bid on the competitor's name and its brand terms in the Google account. Before committing to bidding on such terms, you should understand the following pitfalls and disadvantages. In this article you will find out what bidding on branded keywords of the competition looks like from a competition law perspective, what effects it has on the Google Ads account as a whole, and how - or whether - it is profitable.

Why is the competition bidding on keywords at all?

Using keywords from the competition is particularly attractive when the competitors are well-known brands. The popularity of the brand results in a correspondingly high search volume of very industry-relevant users. These users search for the brand with a specific intention. If your products also cover the functionalities and benefits of the competitor's products, the chance is very high that your ad will also satisfy the search intention - and thus be highly relevant for the searcher. This allows you to withdraw some of this traffic from your competitors and make it your own. In addition, branded keywords are in most cases very cheap, which apparently results in high-quality traffic for low click costs.

What is the competition law situation like?

Using the keywords of the competition in Google Ads is generally allowed if ...

  • The Google Ads ad appears in an appropriately labeled advertising block
  • The display is spatially separated from the organic results
  • The advertisement itself does not contain the logo or any other reference to the brand owner or the products offered
  • The specified domain name indicates a different business origin, so there is no risk of confusion

The Federal Court of Justice decided in 2011 in a legal dispute between Bananabay and Eis.de.

What to do if the competition is bidding on your brand name?

Conversely, this also means that the competition can use your brand as a keyword to steal valuable traffic from you. In that case, you can file a trademark complaint with Google. This does not prevent the competition from bidding on your brand as a keyword. But at least you can prevent other companies from using your brands in ad text. Ads with your brand name that are not yours will be automatically rejected by the Google Ads system.

What are the disadvantages of bidding on competitive terms?

Considering the aforementioned advantages of using the competitor's brand as a keyword, it supposedly makes sense to do so too.

Falling values ​​on the account

However, you should note that the Quality Score of these keywords will be very low, which will increase click prices and decrease the Cross-Account Quality Score (as described in this blog post) because:

  • The keyword does not appear in the ad, suggesting a mismatch to Google
  • The brand name must not appear in the ad, which means that the click-through rate will be very low
  • The brand name will not appear on your website, so the bounce rate will be high, which is a signal to Google that the user experience with the landing page is poor

That means: It's not just your competitor ad group or campaign that will perform less well. But the entire account will be confronted with higher click prices due to the below-average poor values.

Practical experience shows how bad the quality factor of such campaigns is: it can even happen that Google does not place competitor ads at all if the quality factor is too low. In this case, all ‘of the work would be for nothing.

Differentiated legal situation abroad

Please note: In the case of competitor bidding, English-language reading refers to a completely different legal situation, so that such competitor brand campaigns are sometimes recommended there. Depending on the country, comparisons with the competition are permitted, which among other things also allows the competitor to be named on the target page. But even if you advertise domains from companies abroad, there are reasons that speak against bidding on the competition.

Higher costs through "bidding war"

There is always the case that a so-called "bidding war" breaks out. If two companies use the competitor's brand as a keyword to compete with the other for traffic, both parties usually lose. Such a “bidding war” usually arises from the fact that one of the companies uses foreign brand keywords, the other company notices this and uses the same method as a reaction. This increases the click costs of your own branded keywords.

When a user searches for the competing brand, the search query is very relevant to the industry, but at the same time the user is already too far advanced in his customer journey to get involved with other brands at this point. This can be seen in the fact that keywords of the competition convert very poorly in Google Ads, so there are seldom purchases or requests for quotations. The budget allocated for this can be used more sensibly in other campaigns.

Conclusion

At first glance, bidding on the competition's keywords has a lot of potential. However, if you take a closer look, you will find that you are doing more harm to your Google Ads account than you are generating. We therefore advise against using this method at mindshape. Because: We stand for sustainable online marketing and want to make the Internet a little better every day.

Get in touch with us, we will be happy to advise you.
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