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Invest in This, Not That: A Competitive PPC Analysis Solution for the Holidays

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During the holiday season, time is precious. If a certain product isn’t likely to be successful, why would you waste your time negotiating with suppliers, warehousing, working out pricing, modifying your website, running ads, and more?

Product line trial and error has no place during the holiday season and prior to taking the plunge into something, you need to have the ability to make a prompt yes or no decision and answer the fundamental question: is there profit there?

If you're going to invest $20,000 in a product, a savvy business person doesn’t care if the return is $40,000, $80,000, or $800,000 in the beginning. They will first answer the question, “is this product worth pursuing in the first place?”

Once you’ve determined that a product won’t lose money and in fact is profitable, then you can start figuring out if it’s going to allow you to afford a new Ford or a new Ferrari.

Like many retailers out there, you're probably aiming for success this holiday season. New products are hitting the shelves every day for the holiday rush, but it remains to be seen if they are going to sell.

How can tell you if you should bring in a new product for the holiday season? By looking at your competitors and their PPC data.

Deciding what products to carry or not to carry is no easy feat, is a risk in itself. Jumping into a new business venture before looking at and taking into consideration all of the facts and data can be a foolish act.

Many don’t realize that there are clear-cut and effortless ways to help decipher if adding a new product is going to be a positive business decision or a negative one, such as using a competitive analysis tool.

For the informative purposes of this article, we're going to suppose that we are a children’s toy store who has many competitors that are much larger than we are such as the behemoth retailer, Toys R Us. If we were to look and realize that our competitors introduced a certain product for the holidays such as the Angry Birds Plush (evidently stuffed, noise-making bird heads are the trend among young people these days), we would want to confirm if there were positive trends and bids on that product before we can come to the conclusion if we ourselves want to make the investment and carry it as well.

With the economy in the state that it is, making irrational business decisions without taking all of the options and data into consideration isn't the best move.

New Product: Angry Birds Plush?

Now that the holidays are around the corner, as a children’s toy retailer you have decided to consider some new products that have the potential to sell and provide an ample profit, which of course would make you very happy. You have noticed that your competitor has begun the sale of Angry Birds Plush, which require an initial investment of $15,000. With the use of a tool such as SEMrush, you have the ability to spy on your competitors by looking at the proportional increase or decrease of advertising PPC budget that your competitor is allocating for their new product.

angry-birds-plush-ppc

As the Google results show, “Angry Birds Plush” is being bid on by Walmart, Amazon, and even Build-a-Bear who have expanded their market to sell more than just fun-loving teddy bears. These are all large retailers which may lead us to believe that there is actually a definite market for this product.

angry-birds-plush-facebook-ads-by-keyword

By studying the Facebook ads for “Angry Birds Plush”, it can be determined that the retailers who are bidding on the same Google keyword aren’t doing so on Facebook, but this may only mean that they have not yet expanded their advertising efforts to the social media arena.

Those bidding on the Facebook term are mostly the Angry Birds website as well as other, smaller toy shops. These results can allow us to conclude that there is a market for the product overall.

bids-on-angry-birds-facebook

If we look at the trend for the keyword “Angry Birds Plush”, we can interpret from the graph that in recent months the searches and overall interest have increased. Additionally as the image below reveals, more retailers are bidding on the keyword such as Toys R Us, Amazon, Build-a-Bear, Toy Wiz, BB Toy Store, and Kmart. The keyword has a CPC of $0.49, over 6 million results, and approximately 5,400 searches per month.

angry-birds-plush-keyword-retailers-bidding

Another New (or Former) Product: the Furby?

Remember the Furby? Many of us may have thought (and hoped) that they had been taken off of the shelves long ago but the creepy, peculiar-looking Furby who made its debut into the toy realm back in 1998 is making a comeback for the holiday season this year.

Based on the Furby’s lack of public interest a couple of years back, as a company you're unsure if it would be best for you to begin carrying this product again, especially since they are a bit more expensive than the Angry Birds Plush.

furby-google-ppc

Google search results show that the Furby company website, naturally, is bidding on the “Furby” keyword while advertising in their copy that these “new” Furbies can interact with one another (another unsettling feature). Toys R Us is also bidding on it, but we need to consider that they are an extremely large toy retailer with a budget that is probably quite sizeable.

Clearly, some of your competitors have already begun selling the product but you are uncertain if it is going to be something that could be profitable for your business in the long-run, and how to make the decision is the ultimate key.

furby-facebook-ads-by-keyword

On Facebook, Amazon is also bidding on the “Furby” keyword and offering preorders for the 2012 model, but there do not seem to be quite that many ads for the product overall.

Might this possibly be a cause for concern?

bids-on-furby-facebook

furby-keyword-retailers-bidding

By viewing the trends for the Furby, obviously there isn't as much interest lately and searches are sporadic. There are only three retailers who are bidding on the keyword and the only one additional to those mentioned previously is a website called Deal Shout who provides the “best” prices for the Furby from different vendors.

Generally, these results may cause you to hesitate in making the final decision of whether to carry this peculiar yet colorful creature in your store. There are not quite as many results with a total of almost 6 million, a CPC of $0.32, and approximately 33,100 searches per month. While searches may be higher than for the Angry Birds Plush, competitor activity for the Furby is not as widespread.

Making the Decision

angry-birds-plush-vs

The table above provides an illustration of how to decide whether to sell the Angry Birds Plush, the Furby, or any other product.

In this example, the sale of the Angry Birds Plush has already begun and we are aware of the $15,000 initial investment. Since it is our own business we also know that the revenue will be approximately $35,000, which is an acceptable profit, so of course we would choose to sell it.

In contrast, the revenue is unknown for the Furby and not as many competitors are investing in advertising. The trend is also inconsistent, so we may want to reconsider the sale of our furry friends.

What it all comes down to is being able to make a confident “yes” or “no” decision regarding new product sales.

Think of it this way: if you were to fill into the revenue column for the Furby, what amount would make you happy? 20,000? Obviously not. Break even at 25,000? Doubtful. How about 40,000? Sure! Maybe 400,000? Absolutely!

It doesn’t matter what the profit level will be, just so long as you go into it knowing that there will be one.

All that you really need to do is look over the numbers and PPC data. We know that we would need to invest $25,000 to sell the Furby and by spying on our competitors we can assume that the product is not quite as popular, so the choice is obvious in that selling the Furby may result in a much lesser profit than that of the Angry Birds Plush.

Summary

Trends in the advertising budgets of your competitors and assorted PPC data can be clear-cut indicators of which products are more or less profitable for them, and therefore for you. This is another instance where gaining access to the PPC secrets of your competitors can provide you with vital insight into how to make effective, and above all, profitable decisions for your own business. Why take the risks when your competitors can do it for you?

Such as in the example of the Angry Birds Plush and the Furby, if your competitor is changing their budget and bidding or not bidding on a product keyword, there is mostly likely a good reason behind it; all you need to do is determine what that reason is. Perhaps they are simply experimenting with the sale of a new product so are allotting more of their advertising budget to increase the new product’s visibility and gauge a consumer reaction.

If your competitor is spending more money on a product that you don’t sell and less on one that you do, then obviously it's time to find out what that product is and how quickly your company can begin to sell it so that you can capitalize on the success of your competitor.

Making a decision can be much easier than you might think and a very small amount of spying can yield a world of important and valuable information – during the holidays and all year round.


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