Google gives you already all the information you need about your competitors. They tell you the names of your competitors and how often they enter the auctions with you and what’s their impression share and average position compared to yours.
With the launch of new flexible bid strategies, Google has just taken the game to the next level. You can actually set an outranking target in your bid strategies; If you want to make sure you’re beating your main competitor 90% of the time (with some Max CPC bid), You are able to do so by specifying your competitor’s domain and the percentage of time when you want to outrank them. Sounds like a very nice solution to handle competition and get more clients that otherwise your competitor would have acquired.
But wait a minute, what if your competitor is using the same exact weapon against you? what will happen in that case? The only likely outcome of applying it is that you’ll both end up paying more per click than you currently are, until both of you reach the point at which you no longer make any profit. This can’t be a good approach and you should consider why you are applying this strategy and what benefits would it bring to your business? What matters at the end of day is getting a good CPA and achieving the best ROI for your campaign. This strategy is not going to get you there.
So who would this strategy work best for? i would say brands; when the goal no longer becomes limited to conversions and acquisitions but it is stretched to include the brand image and reputation. Another case when this strategy would work best is when there is limited demand in the market for the product/service that you are offering and you want to make sure you acquire as much leads as possible to position yourself in the market as a leader, even if it comes at the expense of making your business less profitable.