No company wants to invest blindly in advertising, especially when it comes to PPC campaigns. Understanding the optimal cost of contextual ads in your industry is practical and essential for a successful marketing strategy.
Ever asked “How much are my competitors spending on PPC?” Understanding these costs becomes even more critical for informed decision-making. This blog post explores practical methods to estimate and analyze their PPC spending.
Why Knowing Competitors’ PPC Spending Matters
Understanding your competitors’ PPC spend is crucial for optimizing your own advertising strategy. Here’s why it matters:
1. Cost per Click Impact
When competitors invest heavily in contextual advertising, it drives up the cost per click and potentially reduces the overall reach for everyone. This can lead to budget overruns and conversions that lack profitability.
2. Strategic Decision-Making
You can invest in contextual advertising, focus on SEO promotion, target expensive high-frequency queries, leverage low-frequency queries, or explore social media targeting.
3. Budget Optimization
Knowing your competitors’ PPC spending lets you pinpoint the ideal budget for your advertising endeavors. This understanding empowers you to make thoughtful decisions, whether tweaking your costs or finding the sweet spot to ensure the utmost success for your marketing investment.
Techniques to Gauge Competitors’ AdWords Budget
Understanding your competitor AdWords budget is crucial for strategic planning. Here are effective techniques to estimate their spending:
1. Assess Traffic Volume
Check out the traffic your competitors are getting with AdWords. Tools like SEMrush or SpyFu can give you useful info on the keywords they’re using. It’s about understanding their ads and figuring out how much they’re putting into the digital game.
2. Track Sales Numbers and Transaction Coefficients
Evaluate the sales generated by your competitors and determine the coefficient of transactions.
By tracking their conversion rates, you can estimate the effectiveness of their AdWords campaigns and infer the level of investment required to achieve those results.
3. Estimate Revenue
Assess the overall income generated by your competitors’ online presence. Understanding their revenue stream can offer clues about the scale of their AdWords spending.
4. Calculate Competitor’s Advertising Budget Percentage
Calculate the percentage of your competitors’ overall budget allocated to advertising. This can be derived from industry reports, public statements, or a careful analysis of their online presence.
Utilizing a combination of these methods allows you to gain a thorough insight into your competitors’ AdWords budget.
Calculating Your Cost Per Action (CPA) for Effective PPC Budgeting
Think of Cost Per Action as the price tag for getting visitors to do what you want on your website—whether it’s making a purchase, filling out a form, or any action that fits your campaign goals.
Understanding your CPA is like peeking behind the curtain to see the actual cost of bringing in leads through PPC advertising beyond just the numbers.
14 Essential Tools for Assessing Competitor PPC Spending
Due to limited data from Google Ads, it’s advisable to shift focus away from individual competitors and prioritize industry-wide insights. In the current paid search scenario, pinpointing competitors’ spending or specific keywords is challenging.
Instead, leverage available trends and industry data through thorough advertising research to make informed inferences about their behavior.
1. Google Ads Keyword Planner
Utilize Google Ads’ Keyword Planner for estimated search volume and bid ranges by entering crucial keywords. Gain insights into search trends and potential bid requirements for ad visibility. However, exercise caution as the “top of bid page” estimate in Keyword Planner may not always be accurate, especially for specific keywords.
2. Google Ads Campaign Target ROAS Simulator
This tool evaluates ad spend and competitor actions to project growth with a budget adjustment. It estimates the total and daily budget based on your desired ROAS.
While more actionable than specific competitor insights, always test these forecasts on your PPC campaigns before making significant changes. Consider using the Experiments feature when transitioning to a Target ROAS strategy.
3. Google Merchant Center’s Price Competitiveness
In Google Merchant Center’s Market Insights, the “Price Competitiveness” report compares your product prices with competitors in eCommerce. Analyzing your Google Shopping data feed categorizes prices as above the industry average, in line with the industry average, or below the industry average.
4. Semrush’s PPC Toolkit
Consider Semrush’s PPC Toolkit to bridge the gap in obtaining specific Google Ads competitor data. This tool offers market analysis, keyword research, and ad tracking, allowing you to monitor your rivals’ top ad positions, keywords, industry competitive positioning, sample text and display ad copy, and more.
5. Ahrefs’ Site Explorer
Ahrefs’ Site Explorer is favored by SEO and paid search marketers alike. Utilize its “Site Explorer” feature to assess a competitor’s paid search strategy. Simply input the competitor’s domain, go to “Paid search,” and leverage Ahrefs’ data to uncover the PPC keywords they rank for, top ads, and pages driving the most paid search traffic.
6. Spyfu’s PPC Research
Utilize Spyfu’s PPC Research tool to analyze competitors on Google Ads. Gain insights into top competitors based on ad spend and overlapping keywords. Explore the “ads history” tab to review competitors’ most successful ad assets from previous years.
7. Auction Insights
Auction Insights provides:
- A snapshot of competitors bidding on your keywords.
- Offering data on impression shares.
- Average position.
- Overlap rate.
- Position above rate.
- Top-of-page rate for each.
8. Google Ads Grader
Receive a report card comparing your performance to industry benchmarks and best practices, covering areas such as wasted spend, Quality Score, impression share, account activity, click-through rate, and the performance of your best and worst text ads.
Gain insights into your competitors’ online strategies and PPC performance with Hitwise. Know their website traffic and audience demographics and discover patterns to inform your PPC approach.
Utilize Serpstat to analyze your competitors’ keywords, ad copies, and landing pages. This tool provides a comprehensive overview of their PPC strategy, helping you identify opportunities and refine your campaigns.
Discover the specific keywords they’re honing in on for their PPC campaigns, empowering you to refine and optimize your own choice of keywords.
Similarweb offers a holistic view of your competitors’ online presence, including their PPC activities. Explore traffic sources, audience interests, and ad placements to fine-tune your PPC strategy for maximum impact.
iSpionage is a powerful tool for uncovering your competitors’ ad copies, keywords, and budget allocation. Use this information to refine your ad content, bid strategically, and ensure your PPC efforts are competitive.
By incorporating these tools into your competitive analysis toolkit, you can gain a comprehensive understanding of your competitors’ PPC spending and your own strategies for success.
Factors Affecting Cost Per Action (CPA) in PPC Campaigns
Several factors influence the Cost Per Action (CPA) in PPC campaigns, impacting the efficiency of your advertising account. These factors include:
- Keyword Mix: CPAs vary based on brand versus non-brand keywords and broad versus long-tail choices.
- Ad Network Distribution: Various networks, such as Search, Display, and Remarketing, have different conversion cost expectations.
- Geographic Locations: Running identical keywords in different locations can notably impact CPA.
- Offer Type: The nature of your offer, whether it’s a white paper or a product demo request, influences CPA.
- Competitive Campaigns: Going head-to-head with top competitors can lead to higher CPAs, especially in competitive markets.
- Offer Keywords: Aligning keywords and ads with the landing page offer results in lower CPAs, while bidding on broad keywords without a matching offer can increase lead costs.
- Timing: CPAs fluctuate during periods of offer or ad testing, as well as with seasonal and holiday variations.
To enhance the cost-effectiveness of your PPC campaign, you must understand these factors.
Determining Your Ideal CPA Target for PPC Campaigns
Determining your target CPA for PPC campaigns involves considering several factors:
1. Long Sales Cycles
For B2B, where the research and purchase decisions involve multiple people, leads may take time to qualify. The complexity of a long sales cycle makes it challenging to pinpoint the exact marketing program that generated the lead.
2. Product Cost
The cost of your product significantly influences your ideal CPA. A company selling a $10K product should anticipate a different CPA compared to one selling a $100K product.
3. Lead Actions
Different lead actions have varying values. For instance, a phone call or demo request might be valued at $250 each, while a white paper download could be valued at $75 each.
To determine your CPA range, consider factors like sales generated, revenue from deals, leads from paid media, and total paid media costs in previous years.
Maximize Results – Learn How Competitors Invest in PPC for Success
Understanding your competitors’ PPC spending is a key element in shaping a successful advertising strategy. While precise figures may remain elusive, using estimation methods and competitive analysis tools can provide valuable insights.
Frequently Asked Questions (FAQs) About Competitor PPC Spending
1. Why is data in PPC Spend different from what I have in Google Ads?
Discrepancies between PPC Spend data and Google Ads may arise due to factors like ad platform fees, taxes, or adjustments. These additional elements contribute to variations in the displayed spending figures.
2. What Do Our Competitors Pay for a Lead?
In B2B, conversion goals vary, including reaching a “thank you” page, entering the Products section, staying on the site for a specified time, or watching a video on the landing page—going beyond just form submissions.