It is essential that the paid search advertiser selects his or her keywords carefully, constructs their ad groups with care, uses budgets well and creates compelling advertisement text to catch the Internet user's attention.

The paid search advertiser then also needs to learn how to manage his or her campaign on a daily basis. He or she needs to learn how to optimize a paid search campaign in order to increase traffic, generate more conversions, drive sales or improve online reputation, for example. Without these skills, the paid search advertising campaign will crumble and die and be a huge waste of advertising budget.

However, the real success in paid search advertising comes from a regular (but not over-eager) analysis of your competition.

What do we mean by the term "Paid Search Advertising Competitive Analysis"?

In the most simplest of terms, an analysis of your paid search advertising competition is an analysis which helps you to get to know the strengths and weaknesses of the campaigns of other companies which are bidding on the same keywords and targeting similar audiences to you.

It is really important to find out where these companies are sending their paid search traffic to, how much money they are investing in their paid search advertising campaigns, which keywords they are focusing the most of their time and budget on and what kinds of products or services they are concentrating on.

This kind of analysis can help you to find ways of improving your paid search marketing campaign. It can also help you to see why other advertisers continue to get more from their online marketing efforts than you do.

What kinds of Competitive Analysis Tools are available?

There are lots of competitive analysis tools available. The variety is broad in terms of use, productivity and price. Each pay per click advertiser will need to independently choose the competitive analysis tool that feels right for his or her paid search campaign and online marketing style. It is a question of trial and error until you find the tool that best suits your needs.

For example, SEMRush and SpyFu are two paid competitive analysis tools that collect reams of information about your competitors&rsquo ; keywords, advertisements, CPCs and traffic volumes, to name but a few areas of interest. The Google AdWords Preview tool, however, is a free feature within which you can begin to analyze your competition by taking a look at their approach to geographic location, mobile vs. desktop and language within their campaigns.

Auction Insights is a new competitive analysis tool from Google which enables you to find out the names of all the other companies which are bidding on the same keyword as you (providing there is enough data, of course). It's definitely worth a look because it is such a specific tool and therefore incredibly accurate in its analysis.

Most competitive tools that you have to pay for do offer you a free trial period which means that you have time to test out many of the products available until you find the right one for you.

What kind of competition analysis should I be doing?

The range of competition analysis that an advertiser does with regards to his or her online marketing campaign varies from advertiser to advertiser. No two advertisers are the same and no two advertising campaigns are the same either.

For example, some advertisers might find that they want to focus on a specific area of analysis, like what is happening within a particular ad group or on a particular keyword. Other advertisers might want to get a general feel for the differences between the successes of their entire campaign with rega rds to traffic or conversion rate. In general, if this is your first attempt at competition analysis, it is best to start small and focused and begin by looking at the data that you can gather on one particular ad group and nothing else.

What can I Learn from Paid Search Advertising Competition Analysis

There are many things that a pay per click advertiser can learn from competition anal ysis, but some of the most important learning curves from this kind of campaign management approach include the following:

1. Know who your real competitors are

One major error that many pay per click advertisers make is to assume that their real competitors are the same from both an SEM and an SEO perspective. This is simply not the case. Your competitors in natural search are no t always the same companies that give you a run for your money in the paid search listings. This is why it is important to do a little analysis and find out exactly who it is you are competing against when paying for your advertisements to appear.

The interesting thing about running a competition analysis on paid search advertising for the first time is that competition you never knew existed suddenly jumps out of the Internet at you. Results and findings from competition analysis can be truly surprising for almost all pay per click advertisers.

Once you know who your real competitors are in paid search, you might find that you actually need to target other keywords that you don't target in your organic marketing strategy in order to take advantage of gaps in the market or keywords which cost you less and generate a higher return on investment, for example.

With a better understanding of your paid search advertising competition, you will be able to make your budget go further and stop wasting time on areas of your online marketing campai gns that you have no chance of showing up for because competition in these areas is just too strong.

2. Know which keywords your real competitors are bidding on

Once you have a clear idea of who your real paid search advertising competitors are, everything else will soon start falling into place and this includes exact and thorough knowledge about keywords.

Knowing what keywords your competitors are bidding on is an excellent way of finding gaps in the market to take advantage of; keywords that no other competitor seems to be focusing on and which will drive traffic and generate conversions for less. You will also be able to see how much traffic each keyword is driving to your competitors' websites and why it is that these keywords are driving the amount of traffic that they are.

For example, a keyword that is not working for you but is working brilliantly for your competitor might be producing such grand results for your competitor simply because they are investing more money in that keyword.

It is also very important to remember that not all advertisers manage their campaigns well. Therefore, even if it appears on the surface that a competitor is doing well, you cannot be sure that they are achieving the conversions they need to cover their advertising costs. Anything that you find out from analyzing your competition should be thoroughly investigated before you implement it as a definitive idea in your own onli ne marketing campaign.

Collect the data and analyze what the results shows about your competition, but use your own intelligence too to make sure that ideas you gather from this analysis are going to be of true benefit to you and your business.

3. Find out which of your real competitors have developed the most successful landing pages

Competition analysis is also really useful in terms of improving your landing page quality. When you compare your landing pages with those of your competitors, you might find reasons why your competitors achieve more conversions than you do because of landing page design, landing page navigation and landing page content.

Competition analysis of landing pages is particularly useful for those advertisers who have no problems d riving traffic, but who struggle to get Internet uses to convert. Take a look at your competitors' landing pages and see if there is anything about their pages that you like, that you have never considered implementing and which makes the whole conversion process a lot simpler for the Internet user in general.

Take those ideas, make them your own and test out your new landing page designs for at least a month to see what happens. We all need to gather inspiration and we all need to learn from somewhere. In many cases, the people we learn the most from are the people we are in direct competition with.

4. Find out what style of advertisements your real competitors are investing in

Advertisement style is another area of paid search marketing that all advertisers should spend more time investigating into and experimenting with. When you use competitive analysis tools, you will be able to review the text copy of the advertisements that your competitors are running.

Pay per click advertisers need to learn how to make their advertisements stand out from the crowd and it is an art that one becomes better at as time goes along. The interesting aspect about competitive analysis is that it allows the advertiser to compare his or her advertisement copy with that of his or her competitors and in this way notice the differences between the services and products on offer.

What do we mean by this?

For example... Imagine you own a cake store and you are competing with other cake store owners for paid search advertisement listings. When you embark upon some competitor analysis you notice that your competitors' advertisement copy focuses on organic cakes, like yours does, but that their advertisements also seem to be targeting an audience with more money to spend.

In this instance you realize that on e thing your company has to offer is discounted rates on bulk orders of organic produce and in this way you make the adjustments to your advertisement copy and start picking up on the traffic with less money spend but still interested in paying a little more for organically produced cakes.

You then also make the necessary adjustments to your landing page and you optimize all the content on that page to focus on the fact that your organic cakes cost less when delivered in bulk and the conversion process (the order process) is easily completed within a few clicks above the fold.

Competitive analysis of this kind can help you to make the right kind of optimization decisions that being to drive more traffic and generate more conversions within days. You can even start investing in URL extensions which reiterate the idea of discounted organic produce to help attract the Internet user's eye. Product listing advertisements are also excellent additions to a paid search marketing campaign as images can do wonders for generate a higher buzz of interest in what it is you have to sell that is so different to others bidding on the same or similar keywords.

5. Find out how much your real competitors are spending on their campaigns

The last area of interest for a pay per click advertiser investing in competition analysis focuses on cost and pricing. It is really useful to find out how much your real competitors are charging for their products and their services.

If some advertisers are able to provide what you can provide for a lot less, why is that? Is the quality of the product or service not as good or are they managing to sell more and therefore spread out the cost for each buyer more evenly? If the quality your product is higher and this is why you charge more, why not make that a focus of your advertising campaign and start advertising towards a more specific niche within your overall target audience; that audience which is happy to pay more for a service or product that is worth the extra cost? This approach could be a really positive start to a new focus when it comes to your online advertising.

You might find that investing more time in brand advertising via the Google Display Network might help to increase your conversions if high quality is more important to you than low prices because you will be forming a reputation about your company in which your target audience is more liable to trust.

The best way to approach a competitor analysis in terms of product / service pricing or cost is to take it one step at a time and look at each competitor in turn for each ad group. Don't be fooled. Investigate suddenly because lots of advertisers have hidden costs that the Internet user finds out about later on along the conversion tunnel and this can be really annoying for the Internet user.

The initial price that is quoted in the advertisement might not include shipping costs or transfer fees, for example. In order to get the full benefits of a particular service, the Internet user may have to sign up for a higher paid plan, one which actually ends up costing the customer more that your service costs, even though at first glance it doesn't seem to be this way.

When you have full knowledge about the exact prices that your competitors charge then you can make decisions about how best to move forward with your advertising campaign and how best to steal customers away from your competitors.

In short, competitive analysis for any pay per click advertiser is an essential element of an online marketing strategy. It helps to make effective optimization decisions and it can help to gain a better perspective and more clarity on your own marketing campaign in a short space of time. Take a look at the competitive analysis tools on offer and start comparing. It is the best route forward for paid search advertising success without a doubt.

Author Bio

David Chapman is Director of Marketing at Webrageous, a PPC Management Company in Reno, Nevada.