Analysing the competition for Search Engine Optimisation

This page was originally written by Mike Briggs on 20 Oct 2006 as an article for Oyster Web.

Every website has competition and website owners who ignore competitors do so at great risk. Unless a website has an online monopoly on a product or service, there will be competitors offering alternatives and substitutes. The level of competition your website faces is revealed in the competitor analysis phase of the Search Engine Optimisation plan.

Competitor analysis is an fundamental requirement in any search engine optimisation/marketing plan because it

(a) Reveals a websites competitive position in the marketspace (on-line marketplace).

(b) Assists in developing competitive strategies.

(c) Investors and other readers of the search engine optimisation/marketing plan will expect it.

If you ignore or minimise the impact competition will have on your on-line business prospects, developing a successful long term search engine optimisation/marketing plan is an unrealistic aim.

Identifying competitor websites

The first step in conducting a competitor analysis is to identify your competitors.

Direct competitors are businesses that are offering identical or similar products or services as your business. These are companies that customers can easily buy from instead of from you, so these companies represent the most intense competition.

Additionally, there may be some degree of first-mover advantage to overcome.
First-mover advantage refers to the edge that a company may have gained by entering a particular market before any competitors.

Indirect competitors are businesses that are offering products and services that are close substitutes. These competitors are probably targeting your markets with the same or similar value proposition, but delivering a different product.
The value proposition is a clear statement of who the target market for a particular product is, of what key benefits the product will deliver, and of the price that will be charged.

Future competitors are existing companies that are not yet in the marketplace that you intend to occupy, but could move there at any time. One obvious source of future competition is an indirect competitor. As soon as an indirect competitor sees you having success in their area with a different product, they may try to duplicate your offerings and so they become a direct, perhaps formidable, competitor.

Analyzing Your Competition

With a list of competitors in hand, the next step is to conduct a methodical analysis of their strengths and weaknesses. Why is this important? It is a widely-accepted fact that a company achieves success through the assets, skills, and competitive advantages that it brings into the marketplace. An analysis of successful competitors should reveal these sources of prosperity and assist you in structuring your business idea. Searching for weaknesses not only provides insight into what others may be doing wrong, but reveals where opportunities for success may lie.

Defining Your Competitive Position

The competitor analysis is necessary background research for what the business plan reader regards as the most important outcome of the competitor analysis section -- a description of your sources of endurable competitive advantage. In this final portion of the competitor analysis your focus turns away from competitors to your business. Specifically, what factors will set your product or service apart from your competitors?

Strengths and weaknesses The competitor analysis reveals the strengths and weaknesses of your competitors. The other half of a SWOT analysis is to look for opportunities and threats that your company can use. For example, a weakness-opportunity strategy would create an opportunity for your business based on a weakness found in competitors. Or a strength-threat strategy focuses on risk avoidance by initiating a strategy that minimizes a threat caused by a competitor's strength.

More information about this SWOT analysis approach can be found in most strategic management textbooks.