You don’t always have to look at what your competition’s doing to be successful, but there are times when it makes sense. You might already have a website that’s plateaued in some way. It might get lots of traffic that doesn’t convert, or you might have a site that’s absolutely adored by a small audience that needs to grow by an order of magnitude.
Or you could still be in the stages of selecting a product or service to market, and you’re finding it hard to distinguish those that generate buzz from those that generate sales. Whether you’ll looking to increase your traffic, conversion rate, or your revenue, the simplest way to get actionable data is to look at your actual or prospective competitors’ performance, and model it. Let’s look at a couple of simple ways to check out the competition.
Look at Ad Spending
Just because certain products and services are widely offered doesn’t mean they’re actually selling. In the brick-and-mortar world, you can tell which kinds of restaurants do well by just looking at their customer turnout, but websites don’t volunteer their sales information. So how do you know if they’re making money?
Regular ad spending is a quick way to gauge how much money’s on the table. If a website is spending an average of $20 a day on AdWords, you can reasonably assume that it’s at least breaking even. After all, it wouldn’t make sense to advertise at a loss.
I just looked up “solar power systems” in the Google Keyword Tool, which reported 3600 local searches per month. Each click would cost me $3.61 if I were to advertise using PPC. So if I wanted to drive traffic to a sales page for a some solar power system products as an affiliate, would it be worth the advertising cost?
Go to SpyFu and enter the keyword “solar power systems” into the “Enter a Domain or Keyword Below” field. In the section captioned “Top PPC Domains for ‘solar power systems'”, the most consistent spenders on that keyword appear to be Solar Direct and Siemens. Since Siemens is an enormous, highly diversified conglomerate that can afford to advertise at a loss in non-core markets, I’ll focus my attention on Solar Direct.
Notice that the company advertised on the up until November, skipped December (presumably not the most auspicious time to advertise a solar product), then resumed advertising in January. When you see consistently colored bars on the ad spending grid from month to month, it means that the advertiser didn’t change its ad copy. This means that either the advertiser is clueless (i.e. didn’t test the clickthrough rates of ad variations), or—more likely—that the keyword and the ad covert well; so they’re probably making money.
If you have a paid SpyFu account, or an account with a similar service like SEMRush, you can drill into the the ad spending timeline for each of the websites keywords—which is awesome, because you can discover keywords that are much better performers than the one you initially entered.
Ads in the Google Search Network
A faster, less systematic way to gauge the commercial prospects of a niche or keyword is to simply enter it into Google and look at the number of ads that display. Generally speaking, if you see a minimum of five ads in the right sidebar, you’re dealing with a topic that’s making enough money to make it worth spending money. The keyword “solar power systems” not only has the maximum eight ads in the sidebar, but another three ads above the organic listings—in other words, every spot Google can sell for it is sold. That’s encouraging. Many keyword research tools like SpyFu (for paid accounts) and Market Samurai (a desktop tool with a free Keyword Research module) will list the average number of ads displayed for each keyword in their listings.
Of course, the flip side of the equation is that you’re looking at a highly competitive market, increasing the possibility that you’ll spend more than you make. The fact that there are 7.5 million pages for the keyword in Google index should be a red flag. This is where doing some further keyword research can help you find a back door into this market.
For instance, if you can find a few related keywords with decent search traffic that have under 60,000 pages indexed, it you might have an easier time than targeting the primary keyword. Never get hung up on an individual keyword. Targeting half a dozen related, less competitive keywords that each pull in 600 searches a month can be more practical than throwing all of your time and energy into a single keyword that gets 3600 searches a month. Instead of obsessing over individual keywords, take a broader view of the overall market you want to target, then look for a sufficient number of high-traffic, low-competition keywords to bring in the number of visitors you need make your sales goals at a reasonable conversion rate.