When Keyword Poaching Pays Off

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Competitive poaching refers to the practice of bidding on ads for a competitor’s search terms, in order to poach customers searching for that brand. It’s a common tactic in the world of digital ads — but is it effective? The author shares results from the first-ever empirical study of this practice, which found that poaching can work well for higher-end brands, but may backfire for lower-end or mass market offerings. Specifically, the study found that when an ad poached customers who searched for a high-end brand, users clicked on it more, but when an ad poached a low-end or mass market target, users were less likely to click. Of course, the author notes that clickthrough rate is just one metric, and there may be other ways in which a poaching campaign could be harmful or beneficial. But these findings can help marketers add a bit of science to the art that is digital advertising, helping them to optimize campaigns for their unique products and customers.

Have you ever searched online for a brand or product, only to see an ad for a competitor pop up above the search results? If so, it’s probably the result of competitive poaching: an advertising strategy in which a brand hijacks a competitor’s ad keywords in an attempt to capture their customers. This tactic, while perhaps sneaky, isn’t against the rules — and it’s more common than you might think. But does poaching really pay off?

To explore this question, I worked with coauthors Jing Gong and Sunil Wattal to conduct the first-ever empirical study of competitive poaching. We ran field experiments in collaboration with a high-ranking business school and a car dealership in which we targeted ads for the school and dealership at users searching for competing organizations, totaling more than 1,000 online ads over the course of a three-month period. Based on this dataset, we were able to identify the kinds of ads and brands for which poaching is likely to be effective, and when it’s more likely to backfire.

Specifically, we tested several different types of ads, as well as several different types of competitors (poachees). The competitors we used for our ads ranged from low-end, mass-market brands up to elite, expensive brands, while the ads took one of four approaches:

  1. Stressing quality (i.e., taglines such as “Top Ranked School. World-Class Faculty.”)
  2. Stressing distinguishing characteristics (i.e., “Extreme Versatility. Great Driver Assistance.”)
  3. Stressing intangible benefits (i.e., “Discover Opportunities. Leave Transformed.”)
  4. A control version without any specific messaging (i.e., “Get a Graduate Degree from XYZ University. Request Information. Contact Us Today.”)

So what did we find? First, it’s important to note that in some cases, our ad appeared by itself in the search results, while in other cases, it appeared alongside the competitor’s ad (depending on whether the competitor had also bid on its own brand name).

In cases where our ad appeared by itself, we found that stressing quality was most effective when poaching a high-quality brand’s search traffic (these ads achieved clickthrough rates more than double those of the control ads), while stressing distinguishing characteristics was most effective when poaching lower-end brands. This is likely because people who search for a high-end brand are likely especially concerned with quality, and so they will be most receptive to advertising messages that focus on that aspect of a product, while those searching for lower-end options may be more interested in ads that speak to the specific features they might be looking for.

Where things started to get really interesting, however, was the cases in which ads for both the poacher and poachee appeared in the search results together. In these cases, the type of ad no longer made any difference, and all that mattered was the status of the poachee. When our ad poached a high-end brand, users clicked on our ad more, while when our ad poached a low-end or mass market target, users clicked our ad less. This is likely because customers searching for elite products may have the luxury to be able to explore various options, while those searching for lower-status products may have more-specific needs and less interest in researching alternatives.

This suggests that poaching is most likely to be effective for high-end brands (or more specifically, for brands interested in attracting consumers who are searching for high-end products). Conversely, if your brand is targeting mid-level or mass market consumers, poaching is likely to be a lot less effective at driving clicks.

That said, clickthrough rate is just one metric. Understanding how ad clicks translate into purchases is a complex science at the best of times. For poachers, it’s particularly fraught, since users who click on a poacher’s ad have already demonstrated interest in a competitor, presumably making them a tougher sell. However, we did find that when the poacher and poachee were geographically closer together, the poacher would get more clicks, suggesting that these users were seriously evaluating the relative merits of each business (rather than clicking on the poacher’s ads out of idle curiosity or confusion).

In addition, while outside the scope of our research, another important consideration is the impact of poaching on competitors’ costs. For lower-end brands, poaching a competitor’s keywords can be a great way to start a bidding war, as it will push up their cost-per-click with limited cost to you (since if it’s not for a high-end brand, your poaching attempt is unlikely to draw many clicks anyway). Of course, knowingly bidding on keywords that are unlikely to perform well just to hurt a competitor can be a risky proposition — but our research suggests it’s an option that is at least worth being aware of.

Finally, another nuance to keep in mind is that many brands may be more complex than the higher ed and dealership brands in our study. Both of these brands sold products that could be compared relatively objectively to their competitors (i.e., Does this car have a state-of-the-art sound system? Is this university highly ranked?). Conversely, brands that sell services may be much more subjective, with different customers evaluating them very differently (for instance, the most lavish and indulgent cruise vacation could be torture for a customer who hates the ocean). Even more potentially fraught are political ads, in which poaching is a common tactic to attempt to win over a rival’s voters. For these sorts of ads, it’s less clear how effective poaching would be — though with many elections being decided by paper thin margins, it’s possible that even a minimally successful campaign could make a meaningful difference.

Digital ads can often feel more like art than science. In particular, when it comes to poaching a competitor’s keywords, it can be difficult to determine an ad campaign’s real impact (let alone guess in advance whether it will be effective). But our research can help advertisers better understand their own competitive landscape, and start to identify opportunities where poaching is more likely to pay off.

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