A Case of “The Prisoner’s Dilemma” in Search Engine Marketing

One of my clients operates in an extremely competitive market. In this cut throat – PPC environment a situation has arisen that brings me back to an Econ – 101 concept I learned about in my undergrad years – “The Prisoner’s Dilemma”

The definition of the “Prisoner’s Dilemma” pulled from Wikipedia is below:

“In this game, regardless of what the opponent chooses, each player always receives a higher payoff (lesser sentence) by betraying…However, if the other player acts similarly, then they both betray and both get a lower payoff than they would get by staying silent…Hence a seeming dilemma.”

So here is my Prisoner’s Dilemma…
Several of my client’s competitor’s have decided to create multiple Adword’s accounts and are serving several ads for the same keywords. This practice is not new and is referred to as “double serving” in the PPC world. One competitor is mainly doing this practice to protect their brand. At one point, I noticed that about 5 of the ads on the first page for the competitor’s brand were being run by this same company.
The company was doing things like creating a landing page that sat on a different domain but clicked through to their main domain. Additionally, they were linking their ads to press releases that talked highly of them or they were linking to their listing with the Better Business Bureau.

What was the impact on my client’s performance?

On terms that contained my competitor’s name from August through November:

• CPC increased over 100%
• Avg. Position went from around 3.5 up to 7
• Conversions fell over 50%
• CPA went up over 100%

Of course other external factors may have also been in play here impacting these number, but the practice of double serving was helping to push my CPC’s up, while simultaneously pushing my position lower, which understandably led to lower conversions and a higher CPA.

I am also seeing another competitor carrying out a similar practice but on my client’s Brand name.

Through August to November:

On my brand terms:
• CPC increased over 100%
• Avg. Position remained flat
• Conversions fell 30%
• CPA went up over 47%

Again, there are definitely other external factors at play, including the environment for this industry getting increasingly more competitive, but individual competitor’s taking up 1 to 5 spots for the same keywords is not helping my performance.

When I first starting seeing the blatant double serving taking place, my initial instinct was that I had to play in this game.

Remember the prisoner’s dilemma, instead of all the “players” trying to cooperate, by playing “fair”, when one competitor defects, then we all need to defect to be better off.

My immediate thought was that I needed to protect my client’s brand by setting up duplicate accounts and “double serving” ads. After my anger cooled and I talked about the dilemma with my client and colleagues, I realized this may not be the optimal response.

Why you may ask?

Let’s go back to the prisoner dilemma again “by us all defecting then we are all worse off”

By us all defecting, we all will have to pay higher CPC’s to achieve the same position, which again increases our spend and increases our CPAs

Instead, of playing in this game, my client and I decided to play defense.
The practice of double serving is actually not allowed according to Google‘s rules (see link below), so we have been reporting instances of “double serving” to Google.

Ad-Words Support

So far, reporting the violations has been working and Google has been linking the violating accounts, which effectively stops the domains from showing up for the same keywords.

However, we are not out of the woods yet…

According to the comments I have read in blogs and forums, it is very easy for violators to violate again and not be caught by Google.

See below:
• google-could-care-less-about-double.html
• webmasterworld.com

In fact, my Google rep even recommended that I watch out for the violators to appear again. Also, new violators may enter the landscape.

Ultimately, as in the prisoner dilemma, the deflections still make us all worse off, because now I have to spend my time monitoring for double serving.

If we could all play fair, we all would be better off, except maybe Google who stands to make more money as we collectively drive up our CPC’s and spend to stay competitive in the market.