Competitive poaching refers to the practice of bidding on advertisements 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 does it work? The author shares the results of the first-ever empirical study of the practice, which found that poaching can work well for high-end brands, but can backfire on low-end or mass-market offerings. Specifically, the study found that when an ad captured customers who searched for a premium brand, users clicked on it more, but when an ad captured a low-end or mass target, users were less likely to click. Of course, the author notes that click-through rate is just one metric, and there may be other ways a poaching campaign could be harmful or beneficial. But these findings can help marketers add a little science to the art of digital advertising, helping them optimize campaigns for their unique products and customers.
Have you ever searched online for a brand or product, only to see an advertisement for a competitor appear 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 advertising keywords in an attempt to capture its 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 co-authors Jing Gong and Sunil Wattal to conduct the first-ever empirical study of competitive poaching. We conducted field experiments in conjunction with a top trade school and a car dealership in which we targeted school and dealership ads to users looking for competing organizations, totaling more than 1,000 online ads over a three month period. Based on this data set, we were able to identify the types of advertisements and brands poaching is likely to be effective for, and when it is most likely to backfire on you.
Specifically, we tested several different ad types, as well as several (poached) competitor types. The competitors we used for our ads ranged from low-end mass-market brands to expensive elite brands, while the ads took one of four approaches:
- Emphasize quality (i.e. slogans such as “Top ranked school. World class faculty.)
- Focus on distinguishing features (i.e. “Extreme versatility. Excellent driver assistance.)
- Focus on intangible benefits (i.e. “Discover the opportunities. Leave transformed.)
- A control version with no specific message (i.e., “Get a graduate degree from XYZ University. Information required. Contact us today.)
So what did we find? First, it’s important to note that in some cases our ad appeared alone in the search results, while in other cases it appeared alongside the competitor’s ad (depending on whether the competitor also had bid on its own brand).
In cases where our ad appeared on its own, we found that the focus on quality was more effective when it came to poaching search traffic from a high-quality brand (those ads were getting click-through rates more than double those of control ads), while the focus on distinguishing features was more effective when poaching low-end brands. This is likely because people looking for a premium brand are likely to be particularly concerned about quality, and will therefore be more receptive to advertising messages focused on that aspect of a product, while those looking for Lower-end options may be more interested in ads that talk about specific features they might be looking for.
Where things started to get really interesting, however, were the instances where ads for Poacher and Poacher appeared together in search results. In these cases, the type of announcement no longer made any difference and only the status of the poached mattered. When our ad poached a high-end brand, users clicked on our ad more, while when our ad poached a low-end or mass target, users clicked on our ad less. This is likely because customers looking for elite products may have the luxury of being able to explore various options, while those looking for lower status products may have more specific needs and less interest in the search for alternatives.
This suggests that poaching is more likely to be effective for high-end brands (or more specifically, for brands wishing to attract consumers seeking high-end products). Conversely, if your brand targets mid-level or mass consumers, poaching is likely to be much less effective at generating clicks.
That said, click-through rate is just one metric. Understanding how ad clicks translate into purchases is a complex science at the best of times. For poachers, this is especially difficult because users who click on a poacher’s ad have already shown interest in a competitor, presumably making them harder to sell. However, we found that when the poacher and the poacher were geographically closer, the poacher would get more clicks, suggesting that these users were seriously weighing the relative merits of each company (rather than clicking on the poacher’s advertisements by simply curiosity or confusion). ).
Additionally, although outside the scope of our research, another important consideration is the impact of poaching on competitor costs. For low-end brands, poaching a competitor’s keywords can be a great way to start a bidding war, as it will increase their cost per click with limited cost to you (because if it’s not for a premium brand, your poaching attempt is unlikely to attract 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 at least worth knowing about. .
Finally, another nuance to keep in mind is that many brands can be more complex than the higher education and dealership brands in our study. Both of these brands were selling products that could be relatively objectively compared to their competitors (i.e., does this car have a state-of-the-art sound system? Is this university well-ranked ?). Conversely, brands that sell services can be much more subjective, with different customers rating them very differently (for example, the most lavish and indulgent cruise vacation could be torture for a customer who hates the ocean ). Political ads are even more potentially heavy-handed, in which poaching is a common tactic to try to win over a rival’s voters. For these kinds of ads, the effectiveness of poaching is less clear – although many elections are decided by slim margins, it’s possible that even an unsuccessful campaign could make a significant difference.
Digital ads often look more like art than science. In particular, when it comes to poaching a competitor’s keywords, it can be difficult to determine the real impact of an advertising campaign (let alone guess in advance whether it will be effective). . But our research can help advertisers better understand their own competitive landscape and begin to identify opportunities where poaching is more likely to pay off.