Competitor Analysis in online marketing
What is competitive intelligence or competitor analysis
Are you aware of your online performance compared to your competitors?
According to Wikipedia (who cite Entrepreneur.com), competitive intelligence (CI) is the action of defining, gathering, analyzing and distributing intelligence about products, customers, competitors and any aspect of the environment needed to support executives and managers in strategic decision making for an organization. Exactly the type of broad definition that makes it difficult to grasp the essence and especially difficult to see the benefits for an organization. However, almost everyone knows one or two of the more famous competitive intelligence frameworks.
Well known examples of competitive intelligence frameworks in business are the Porter’s Five Forces framework which analyzes the competition of a business based upon five ‘forces’ such as threat of new entrants and bargaining power of buyers. The most well-known example is probably the good old SWOT analysis which deals with internal and external factors that are likely to affect a company’s success.
However, it’s not necessary to utilize a framework in order to use competitive intelligence to your advantage. Less complicated and theoretical examples are simply comparing your prices to competitors’ or taking a peak at their social media platforms once in a while.
The goal of this blog is to gain a better understanding of the status, possibilities, advantages and problems with competitive intelligence in online marketing, starting with the status.
Competitive intelligence in online marketing: status quo
Having worked as a digital consultant for major players in my home county, it has become my understanding that competitive intelligence in online marketing is currently not an integrated part of most companies’ online marketing strategy and/or decision-making processes. Which is quite surprising since the same companies are used to integrating competitive intelligence into other important processes in their company, e.g. product pricing. This makes it interesting to look at the underlying causes.
Firstly, one of the major reasons is the digital maturity of companies, or the lack thereof. Digital strategy is often created, implemented and monitored by agencies which sometimes lead to a lack of in-depth knowledge within the company because of the outsourcing of valuable knowledge. Additionally, companies sometimes are yet to make major improvements (e.g. creating an optimal mobile experience) in order to catch up with competitors and logically give these actions priority over starting a competitive intelligence process.
Another important reason is the relative youthfulness of the online marketing and consultancy industry. Whereas business / strategic consultancy has been around for a long time and has matured strongly during this period, online/digital consultancy is relatively new and therefore less developed. The theoretical base is far less strong and there are fewer strategic frameworks to guide consultants.
Lastly, it is essential to note that the data required to perform competitive analysis in the digital landscape is often difficult and/or expensive to attain. Even the data that is less difficult to attain is often scattered across sources and platforms and therefore still time consuming to generate and monitor structurally. The data just isn’t readily available for companies.
What are the possibilities in online marketing?
Personally, it was surprising to see how few companies have integrated competitive intelligence into their online decision-making processes. This might mean that it is also surprising for some of the readers to find out how much data is available. There is (competitive) data available with regards to website performance, SEO rankings, SEA budgets, number of display ads, app downloads, social engagement and other relevant digital KPI’s. Additionally, it is possible to combine this available data into new KPI’s in order to gain a more holistic view of performance relative to competitors. The possibilities are there, but what is in it for me?
I’ve been doing well without it, why should I start now?
“Competitive intelligence involves breaking out of established patterns in order to look at things in a different way”
There is a list of reasons to start using competitive intelligence as soon as possible, which will be provided. However, the most important reason to start using competitive is that it provides a completely new perspective on your online performance which enables you to make smarter decisions based upon a more complete view of the digital landscape. Below a list of insights that will make you want to start with competitive intelligence as soon as possible.
- Benchmark your results. Is 25% organic growth still a good result when your main competitors grew with 100% on average?
- Spotting opportunities and threats timely: Your competitor is trying to enter market X which can be derived from an increase in ranking, how do we respond to this?
- Learning from successes and failures: We have seen a significant increase in social media following for competitor X following campaign Y. What made this campaign so successful?
- Dealing with the information overload: By focusing on the most important KPI’s and benchmarking these KPI’s to competitors you avoid an unwarranted focus on irrelevant and isolated metrics.
- Audit your media agency: We have been spending a lot of money on strategic consultancy in the past few years, what has it really brought us, other than the results we have been shown by the agency.
- Driver for innovation: Having a clearer image of what is happening in the competitive landscape has been researched to positively influence innovation in companies (Tanev & Bailetti, 2008).
- Competitive advantage: As mentioned previously, competitive intelligence in online marketing is not yet widely adopted. Adoption therefore could lead to a competitive advantage by having data available that competitors do not and acting upon this data.
And what are the pitfalls of competitive intelligence in online marketing?
There are also risks associated with utilizing competitive intelligence. Firstly, having this data available where it previously was not might lead to a competitor focus which is too strong. This may cause tunnel vision and (e.g.) limit your innovative capabilities. Besides this, metrics do not always tell the complete story when looked upon in isolation. For example, a competitor might have 25% more followers across social media platforms. If your followers have a 200% higher engagement rate, then you could argue that you are the top performer in the social landscape even though the main KPI suggests otherwise. Therefore, it is essential to look at more than one metrics or combined metrics in order to interpret the data correctly.
I am convinced, how do I get started?
Beginning is the easy part. You could start by regularly checking your competitor’s website and social media platforms. There are also convenient tools such as Google Alerts which provides you with updates if your competitor is mentioned somewhere online that might prove useful.
However, if you want to gain the advantages listed above, it is more complicated. There are several solutions in the market available that might help you utilize competitive intelligence to your advantage. Important aspects of selecting a tool are that it provides accurate, real-time and holistic data. A social tool helps, but a tool that includes social, SEO, SEA, display and app data helps more. Furthermore, the tool should present not only static data but also trends that lead up to the current data. Additionally, when a set of data is available it could be worthwhile to combine metrics in order to get an even more holistic and strategic point of view.
Who wouldn’t want to know their position and the position of their competitors, and how to grow this position?