Along with your natural ranked competitors you should also check out the paid ranked competition. Seeing who uses paid advertising, analyzing positions, consistency of ad occurrence along with checking cost-per-click rates can give you a good idea of the kind of budget that is being employed to achieve top ranked positions. At times, you may find the same competitors ranked both naturally and in the sponsored results.
A little research into the sponsored results areas can give you an idea of what kind of budget your competitors are spending each month to maintain those positions. One way to check this is to simply set up a sponsored ad account on either Google or Yahoo!, or both, and build an ad for the same keyword phrases. The tools within those systems will give you an idea of the per-click costs to hold those top positions. See how much a top position costs for each click then multiply that against the estimated traffic stats provided. This will give you an estimated monthly cost for the ad.
You might want to monitor sponsored results several times a day over the course of a couple of weeks, noticing if the ads are always showing or if they are rolling in and out. Advertisers can set daily budget limits that prevent the ads from being clicked on too many times each day, keeping the advertiser on budget.
Also be aware that click thru rates can be as much as 10-15% or as low as ½ of a %, depending on the individual ad. If your competitor has a poor performing ad they may be spending less than you would assume.
This post is part of a continuing series on the topic of:
Optimizing For Maximum Search Engine Performance
Sub-Topic: Know Your Competition
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