1. Too many competitors: Pizza in New York City, lawyers in San Francisco, accountants in Chicago, stores selling cameras — these are all situations where there are far more competitors than there are available ad slots. Plus, the top positions get such an overwhelming percentage of the clicks that the rest of the advertisers must live on the crumbs.
2. Irrational competitors or ones with metrics you are unwilling to use:When a competitor consistently out-ranks you for position, they likely have a great Quality Score and therefore are bidding less than you, particularly if they are a well-known brand and you aren’t. They get a natural “brand discount” on PPC because their click-through rate (CTR) is higher, all other things being equal. Often it’s a matter of making a higher bid due to a different way of measuring profitability or return on investment (ROI). It may also be an irrational bidder.
3. Inability to match Quality Score: If you can’t match the competition’s Quality Score due to their brand recognition, or the simple fact that consumers perceive their ads and/or domain names to be more relevant, then you’ll be paying a surcharge on clicks.
4. Cherry-picking high-value clicks doesn’t deliver scale: Using day-parting and geo-targeting to cherry-pick the very highest value clicks out of the clickstream is a great strategy to increase volume on important keywords when the competition is bidding aggressively. However, in some cases there simply aren’t enough super-profitable clicks to cherry-pick, and so you may find yourself stuck with a high-profit, low-scale campaign.
5. Lopsided keyword distribution: After 15 years of PPC, most keyword lists range quite far into the tail. When the keyword tail is short, and consumers disproportionately tend to favor a small number of keywords, you may end up fighting the same exact competition for nearly every one of your keywords. There may be room for keyword creativity in a few cases, but often you will be out of luck.
written by for ClickZ