Bidding on competitor brands: the honest maths

Bidding on a competitor's brand name is permitted in most jurisdictions as a keyword. Using their trademark in the ad text generally is not, and will be removed on complaint.

That is the legal position. The commercial position is more interesting.

Why it is expensive

Quality Score punishes you. Your ad is less relevant to the query — someone searching a competitor's name wants that competitor — so expected click-through rate is low, ad relevance is low, and cost per click is correspondingly high.

You are also bidding against the competitor themselves, who has excellent Quality Score on their own name and pays a fraction of what you do for the same position.

Why conversion rates are poor

Brand searches are usually late-stage and specific. Someone typing a competitor's name has often already decided. Intercepting them requires giving a reason to reconsider at the exact moment they were about to act, which is a high bar for an ad.

Typical conversion rates on competitor terms run well below other campaign types.

When it genuinely works

When you have a specific, provable advantage the searcher would care about. Substantially cheaper, or available in a region the competitor is not, or without a limitation they are known for.

When the competitor has a known problem. Price rises, service failures, an exit from a market.

When you are the established option and they are new. Reverse of the usual framing, and considerably more effective.

Defensively, as a response. If they bid on yours, bidding on theirs raises their costs and gives you a negotiating position. This is a game-theoretic reason, not a performance one, and should be budgeted as such.

The measurement discipline

Give it its own campaign. Always. Blending competitor terms into a general campaign hides both the cost and the poor conversion rate inside averages.

Then judge it on its own numbers over a long enough window — these campaigns have low volume and take time to produce a readable result.

The thing usually forgotten

Check whether anyone is bidding on your brand first, in auction insights. Defending your own name is nearly always better value than attacking someone else's, and the two decisions get made together far less often than they should.