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The Netsetter: Reviewing Ad Spending for Competitive Intelligence

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?
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