What Online Services Can -- and Can't -- Teach You About Your Competition

The Dos and Don'ts of Using Competitive Analysis Tools

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Tom Hespos
Tom Hespos

First, the bad news: If you want a reliable measure of what your competitors are spending online, you're out of luck. Don't bother looking for the kind of reliable methods available in traditional media; the web doesn't offer them.

Methodological problems throw spending figures off wildly. There is some good news, though: Competitive tools for digital display aren't useless, and you can glean lots of other competitive insights from the data your agency gives you.

First, let's talk about how you ought to use digital competitive tools:

Do: Leverage Competitive Tools for Creative Insights
While competitive tools might miss details of competitors' buys, they're pretty good at giving an overview of what the competition was running over a given timeframe. You'll be able to see their banner ads and other forms of display ads, and thus get a fairly good idea of what competitors were trying to achieve with their campaign. Seeing "Click Here to Buy" messages in the frames of a banner ad means the ad was part of a direct sales campaign, whereas a "Click Here to Sign Up For Our Newsletter" call to action means the campaign supported CRM. If a competitor was supporting a brand objective, a social media support objective, or a promotion, you'll be able to tell from the creative that was running at the time.

Do: Use Competitive Tools for Media Strategy Insights
Competitive tools are pretty good at giving a snapshot of where competitors were running last month or last quarter, and once you have an idea of what ran, where and at what time, you can put together some accurate guesses as to why. Competitive services don't track all sites and don't necessarily pick up all ads, but you can discern the basic media strategy of a competitor by looking at where they ran.

For instance, if a competitor ran an all-out blitz covering the home pages of the major portal sites for a day, that's indicative of a buy that seeks to cume reach very quickly -- perhaps support for a sales event. Looking at the creative that ran on that day can confirm any suspicions you might have. Your ad agency might also be able to look at a list of sites on which a competitor ran activity and tell you whether or not the buy was likely executed with an ad network. Knowing a bit about where competitors run ads might give you some insight into how they approach their buys, and how they value digital display media.

Do: Use Competitive Tools to Detect New Efforts
If you or your agency are regularly reviewing competitive reports, you'll see whether activity is showing up on new sites or whether new ads are replacing old ones. When new messaging appears in digital display ads, the competitive tools are pretty quick to pick it up. In fact, you might learn about a new effort or integrated ad campaign first from your digital competitive tools.

Now let's look at the pitfalls of digital competitive reports, and what you ought to avoid:

Don't: Trust Spending Figures
You might have already compared your own reported spending to your actual spending and wondered why they were so far off. (If not, please do so -- it's a valuable exercise.) The inaccuracies are the result of a methodology problem that has existed for more than a decade, and no one is likely to solve it soon.

What throws off the figures are three vexing challenges: The first is an incomplete picture of a competitor's ad campaign, because the competitive service is unable to track every impression on every ad-supported site. The second is the guesswork these services do to predict the volume of the buys they do pick up. Finally, the competitive services are off with their spending figures because they have no idea how the agency bought the inventory. Was it a $20 CPM premium buy, or a 50-cent CPM remnant buy? Maybe it was bought on a performance basis. The competitive service doesn't know.

Whereas in traditional media, competitive spending is usually off by a predictable radio, too many variables contribute to digital's variance for digital spending numbers to be off in a consistent way. So don't trust the numbers.

Don't: Assume Every Bit of Display Activity Was Picked Up
If no ads were picked up for a competitor last quarter, that doesn't mean they were dark. Competitive tracking services have trouble picking up targeted buys. Your competition could have run a few million dollars' worth of behaviorally targeted, geo-targeted or profile-targeted advertising that flew under the radar of the competitive services. Furthermore, your competitors could appear invisible to you if they advertised deep into the long tail -- whether buying directly on smaller sites, or using networks that reach people in places other than on the web's top ad-supported sites.

Don't: Think You're Getting the Whole Digital Marketing Picture
Competitive tools will give you some guidance on digital display activity. That's what they're built to do. But you'll need separate tools to tell you about a competitor's share of a category in search. (We had to build our own tool to address this gap.) Neither will you get meaningful data on what competitors are spending in social media (unless the display campaign has a significant component of supporting ads on Facebook and the like). Nor will you get guidance on what they're doing in CRM, mobile apps or in other non-display areas of digital.

Obviously, there are some deficiencies in how we track competitive activity in the digital realm. This guide will give you an idea of what's real and what's not -- or, at least, what questions you ought to ask your agency, the next time they tell you what's going on in your category.

Tom Hespos is the president of Underscore Marketing, a boutique firm that creates and manages digital marketing programs."
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