Whether you are only considering your go-to-market strategy or are looking for opportunities to grow your business, a thorough exploration of the competitive landscape is essential for success.
This is where competitor analysis enters the stage, becoming your key source of market and competitive intelligence, needed to ensure growth and maintain or reveal your competitive edge.
If approached right, competitor analysis can become a goldmine of ideas that can help you make data-driven and more efficient decisions, helping you in:
- Pinpointing your unique value proposition (UVP);
- Finding new market opportunities and growing your market share;
- Identifying gaps between your and competitors’ marketing efforts;
- Prioritizing your marketing and product development investments; and
- Discovering upcoming market trends and shifts in your competitors’ marketing, audience, and product strategies.
This post will guide you through the key milestones of competitor analysis, showing how to optimize and automate this process, as well as uncovering how the insights gathered can be turned into actionable business decisions.
An integral part of market analysis, competitor analysis is an in-depth exploration of your competitors’ digital footprints, helping you to gather consumer, product, and marketing insights on your rivals.
The insights you gather from analyzing your competition can ensure that you stay up to speed on market trends and shifts, thus helping you to adjust your business and marketing strategies in line with industry best practices and changes.
From uncovering untapped growth opportunities to staying alert to competitors’ strengths, competitor analysis allows businesses to leverage the power of competitive intelligence and channel this knowledge into amplifying their market positions.
Unlike a go-to-market strategy, competitor analysis is not a one-off thing; with each iteration, you should be ready to alter your strategies according to the newly discovered insights to capitalize on competitors’ weaknesses.
Forbes experts suggest only 1% of a marketing department’s time should be spent on competitive analysis; others prefer to stick to an 80/20 rule (with 80% of a CMO’s time dedicated to own-brand expansion, and 20% going to researching competitors).
In reality, though, the frequency of competitor analysis will vary from business to business. If you are within a steel mill business, you might get away with an annual check, yet in other industries like fashion e-commerce, strategies and competitors are constantly changing, so a quarterly reevaluation of the competitive landscape would be a must.
Although extensive, this task doesn’t have to be a dreary one, as you can make use of all the martech tools that help you to automate the competitive analysis process – from our very own SEMrush for comprehensive competitor analysis to Google Alerts for monitoring mentions.
Competitor analysis is a step-by-step process, where at each stage you gather certain information about your competitive landscape. Of course, you can always add or remove certain substeps, but the general point is to:
- discover the key players you are competing against;
- determine how they stand against the market;
- pinpoint your rivals’ particular strategies – be it the audience, product, or marketing – and benchmark them against yours to identify their (and your) market strengths and weaknesses.
The success of your competitor analysis will largely rely on your choice of competitors to consider.
You may try to include all possible rivals – from direct* to indirect** – or only focus on the most established industry players when running superficial research. In this case, a quick Google search and common sense will suffice.
*Direct competitors offer products similar to yours and operate within the same market, both in audience and geographic terms. The most obvious example is the rivalry between McDonald’s and Burger King.
**Indirect competitors may be less obvious, offering substitute/alternative products within your market. For instance, a movie streaming platform might not directly compete with a gaming company, yet they pretty much offer similar solutions to a similar audience, essentially satisfying the same customer need, namely, what kind of entertainment to pick when staying at home.
An in-depth analysis, where you want to identify rivals that pose the biggest challenge, should focus on your closest direct competitors – based on geographic, audience, and market share factors. Here, you will have to make use of martech tools that will uncover this kind of data.
At this stage, your goal is to get a comprehensive idea of your competitive landscape.
Let’s imagine that we are preparing a market strategy for a new startup, Any-Home, aiming to compete with Airbnb. With the help of SEMrush’s Growth Quadrant (Market Explorer tool), we can instantly get a clear picture of who our top competitors might be:
It’s not just about the key competition, though.
On top of showing who your major rivals are, the Growth Quadrant also gathers insights on market players that have been expanding their market share, thus causing the biggest challenges to the status quo, and the ones that aren’t seeing much traffic growth, implying that they are solidly occupying a certain market niche.
Once you have selected the most relevant list of competitors, it’s time to dig into their digital strategies by taking a close look at their market share, target market, best products or services, and marketing tactics.
Although you’ve already selected your competitors based on market share, you have to get a real picture of where each and every competitor stands against you and the overall market.
It may be an impossible thing to estimate in the offline world unless you take on substantial costs by employing the likes of Nielsen or Gartner. But in the online realm, traffic share numbers can be an indicator of your competitors’ market share.
Why care about this metric? You might be striving for product perfection or marketing excellence, but if your competitors are getting a significant share of the market, this may indicate which product (marketing or customer service) standards are ‘good enough’ for your audience.
Returning to our Any-Home startup, this is how Market Explorer illustrates its competitors’ market positions, showing that Airbnb, Vrbo, and Vacasa are the biggest competitors for Any-Home:
The key thing to understand when conducting a competitor analysis is how your rivals market their products, and which market strategies bring them the highest impact.
By market strategies we mean the analysis of your competitors’ online presence, promotion (traffic generation) strategies, and go-to platforms.
Initially, start with exploring the key traffic-drivers for your competitors.
SEMrush’s Traffic Analytics tool reveals that Any-Home’s key rivals – Airbnb, Vrbo, and Vacasa – mostly get their visitors from direct and search traffic:
This implies that in regard to customer acquisition they are mostly placing their bets on brand awareness and SEO.
An overview of your rivals’ main traffic sources can help you to understand which user-generation strategies are working most efficiently for your competitors and, thus, might be a threat or opportunity for your business:
- High Direct traffic often indicates that the brand has high brand awareness amongst its audience and is placing its efforts in brand marketing campaigns.
- High Search traffic implies that the brand’s website is well-optimized for search, and attracts most of its audience through having top-notch search visibility.
- High Referral traffic potentially means that the brand has a wide net of marketing and media partnerships (not paid) and invests in great reviews and referrals.
- High Paid traffic clearly shows that the brand is allocating large budgets, and/or has a well-thought-out online advertising strategy.
- High Social traffic indicates an effective social media presence and strategy.
Discover Which Audiences (GEO) Your Rivals Are Targeting
While you’ve chosen your competitors based on the fact that you are targeting audiences within similar locations, you should also keep an eye on what other markets bring them significant traffic.
The very same Traffic Analytics tool uncovers that, on top of the US, Any-Home could target audiences in Germany, Canada, Columbia, and Brazil, which all together bring around 4.5 million monthly visitors to Airbnb:
Although in the case of Airbnb, 4.5 million visitors only account for 5% of the brand’s overall traffic, in some other industries like fashion or entertainment, this is a crucial step to factor in, as many Asian streaming platforms, for example, target Asians living abroad, who often make up the biggest fraction of their audience.
From market strategies, you can then move on to exploring your rivals’ marketing strategies, taking a more granular approach, and deep-diving into their SEO, content, advertising, and social media strategies.
Armed with these insights, you can start revisiting your own current marketing tactics and campaigns.
Having chosen the right competitors to benchmark yourself against, you already know that you are sharing a somewhat similar product range and audience, but it’s important to keep watch on any shifts in your rivals’ offerings and target personas.
By understanding which pages are seeing the highest traffic fluctuations, you can infer any potential changes in your rivals’ product and targeting choices.
Based on Traffic Analytics data, Any-Home’s competitor Vrbo used to attract the highest traffic to its offerings in the southern states of the US – Florida and California – implying that they were targeting Americans who were potentially looking for a vacation or nice warm weather:
Traffic Analytics tool (Top pages report: Vrbo, October 2019, US)
However, in October 2020, the most popular destination page was dedicated to customers who were looking for an alternative space to work from home (WFH):
Traffic Analytics tool (Top pages report: Vrbo, October 2020, US)
This, of course, is a pandemic-related shift in regard to both product and audience. Yet these insights indicate how quickly your competitors are adapting to changing market realities and whether their efforts pay off.
If your rivals have invested in new offerings and might be attracting new audiences to their pages, the next logical step is to understand how they promote their new products.
The same Top Pages report we looked at above for pinpointing audience and product shifts shows which channels your competitors invest in to generate traffic.
In the case of Vrbo, it looks like they went into full social media mode when promoting their WFH offering, which is smart, given that social media penetration has drastically increased throughout the pandemic.
Your competitor analysis shouldn’t stop at just discovering where your rivals’ traffic comes from, you should also consider where the audience goes next to be able to distract competitors’ audiences with your offering and target them with your advertising and other marketing campaigns.
The Traffic Journey report reveals that Any-Home’s key rivals’ audiences mainly leave their sites to visit Google and Facebook, and it’s best to catch them on these platforms, potentially investing in Google and Facebook ad promotions:
It’s also interesting to observe how Airbnb’s and Vrbo’s audiences cross-visit their sites, probably in search of a better offer, so it’s something to be aware of for Any-Home when crafting its marketing strategy.
Once you’ve gathered all the necessary competitive insights, you have to move from simply seeing a number of useful strategy tips to a full-fledged action plan.
Although you could spend some time analyzing your newly uncovered information, you can instead map out this data on a Strategy Canvas, featured in the Blue Ocean Strategy book.
This canvas will help you to illustrate your insights on a single canvas to pinpoint where your competitors’ weaknesses and strengths are, as well as benchmark yourself against them.
The book provides an example of what Southwest’s (the pioneer of low-cost air travel in the US) Strategy Canvas would look like if they were comparing themselves against other airline companies and car travel (direct and indirect competitors):
Taking this book’s example as a template, you can create a canvas of your own, where you’ll place the key product or marketing features you’ve analyzed on the horizontal axis, and the high/low or strong/weak ratio on the vertical axis, and start plotting your and their strategies.
By employing the Strategy Canvas logic, you’ll be able to assess your and your competitors’ strong and weak points and instantly spot your areas for improvement, which, in turn, should bring you tangible business results.