You may control all aspects of your website, but there are numerous factors beyond site optimization and measurement that impact your revenue directly. New firms seemingly come out of oblivion, and new technologies and approaches preempt existing businesses. More often than not, the damage inflicted in terms of revenue is due to competitors’ actions. In a global survey conducted by Fuld & Company, two-third of the respondents affirmed that their organizations had been caught off-guard by as many as three high-impact episodes in the last five years. A staggering 97% of the respondents admitted that their companies do not have an early warning system in place. Ignorance is no more bliss – what you don’t know can hurt you.
Making business decisions based on cloistered data can severely hamper the revenue potential of any organization. Your own silo of data only construes half of the picture and you would remain unaware of the other half. An in-depth knowledge of the entire business ecosystem is indispensable. Every business has to take into account the environment in which they function: industry, suppliers, buyers and ‘competitors’. Research is the main tool used to study industry, suppliers and buyers. However, businesses take different approaches to analyze competitors. All of these approaches involve data collection, interpretation of data to derive information and analysis of the information to deduce intelligence.
Competitive Intelligence – An Antecedent
In recent years, competitive intelligence (CI) has attracted the interest of many businesses. This interest is part fueled by easy availability of information and a surge in the proliferation of commercial databases, both free and paid.
Competitive intelligence is a marketing tactic and it is imperative that businesses incorporate it in their strategic marketing plans. It mandates a data gathering system, a process to verify the credibility of data, analysis of data collected, and formulation of action plans based on this information. Online marketers, in this regards, enjoy an advantage over their offline peers; they can get data pertaining to their competitors’ marketing activities with much ease as compared to their offline counterparts.
Many organizations use competitive intelligence for counteroffensive when a more productive use would be to utilize it to formulate long term, non-competitive strategies. Applying competitive intelligence to gauge the current and future environment, identifying and neutralizing weaknesses and adapting strategies to the changing environment would bear fruitful results.
Mapping the Competitive Landscape
Why do some companies in an industry excel and achieve hegemony while others, sometimes with far superior resources, struggle to survive? The answer is simple – they compete with competitive intelligence. I am not trying to imply that other factors won’t count, but if all else is equal, competitive intelligence would be the deciding factor.
In the past, gathering, analyzing, and implementing strategies based on metrics of your own website were sufficient to give you a dominant market position. The game plan could very well be formulated in isolation, discounting the external factors. But with the rapid expansion of online commerce, competitive intelligence has gained precedence.
Competitive analysis has two distinct dimensions, the competitors and the criteria, commutatively called the competitive framework. The function of competitive framework is to present data in a fashion that would facilitate the comparison of websites across various criteria, effortlessly. But before you could interpret data you would have to get it, and your competitors are the most unlikely source.
Data Acquisition and Assimilation
Data acquisition is the most crucial element of competitive intelligence. The Internet serves as a ready source of data, but the level of accuracy varies from one source to another. Absolute facts and figures are hard to come by in most cases.
Competitive intelligence data is mostly provided by third parties specializing in data collection. Listed below are some resources that can be used to obtain data required for competitive intelligence analysis.
- Hitwise
- ComScore
- Nielsen//NetRatings
- AdGooroo
- Archive.org
- Quantcast
- Compete
- Alexa
- Semrush
To give context to the data obtained from aforementioned and other resources, the data will have to be interpreted and represented to provide actionable information. Mentioned below are a few ways in which this could be accomplished.
- Visits by industry segment: Inspecting and examining the industry segment that you are targeting will help you identify the big players and the level of competition likely to be faced. It is the first and rudimentary step in studying competitive landscape and plotting the future course of action.
- Search engine traffic share: It is estimated that 80% of traffic for a particular website comes from search engines. Knowing your share of traffic against your competitors would play a critical role in search engine marketing. Armed with this knowledge, you will be in a position to ascertain if increase in traffic is an industry-wide phenomena or whether your optimization efforts are helping you to beat competition.
- Analysis of upstream/downstream traffic: By looking at your web analytic tool, you would observe that the referring URL section is sometimes blank. This bit of information is important to study the traffic sources and their performance. Third party data vendors could very well help you bridge this information gap to a certain extent, if not completely. Knowledge of the referring sources for your competitors’ websites would help you in exploiting additional sources for traffic. Similarly, the know-how of where visitors go after leaving the website would help gauge the reasons that might be triggering the exodus and thus help in plugging the loopholes.
- Segregating traffic by Media mix: Segmenting the core stream of traffic (the media mix) is equally important. This vital portion of information can be used for comparison, and thus help identify the scope for improvement and avenues for further exploration. Knowing the major sources of traffic for your competitors would enable you to delve into those sources and derive goodies for yourself.
- Segmenting traffic by consumer profile: Consumer profiling data (age, demography, interest, income, lifestyle, etc.) can be used in tandem with their browsing behaviors to understand the internet behavior of your targeted segment. Again, comparing this data with that of your competitors would allow you to pinpoint untapped segments or segments that are more profitable than others.
- Share of power key phrases: Category keywords like mp3 players, DVDs, digital cameras, etc. are known to generate high volume traffic and serve as an ‘entry points’ into the process of consideration. Knowing your share of market for such keywords with respect to your competitors would help you study customer reach. Marketers may be divided over this, but reaching a customer early has its own benefits.
Warning Note: We have a lot of data at our disposal and sometimes it too tempting to go on an overdrive. It is therefore imperative that conscious efforts are made to prevent this as it could lead to waste of precious resources. In addition to this, comparison of parameters like conversion rate, page view, etc. should be ignored as organizations have radically different business strategies and these parameters would vary accordingly.
Online marketers need competitive intelligence to make better informed decision. In absence of competitive intelligence, online marketers would be running search marketing campaigns with blindfolds. Sun Tzu, a Chinese military strategist, once said, “If you are ignorant of both your enemy and yourself, then you are a fool and certain to be defeated in every battle. In you know yourself, but not your enemy, for every battle won, you will suffer a loss. If you know your enemy and yourself, you will win every battle.”
