Spyfu: How Keyword Spy Tools "Spy"

Let’s get something straight right from the get-go.
I’m not a fan of Spy Tools, so if you’re looking for someone to tell you that you should use them, then I’m not the guy. I see PPC Spy Tools as a glorified gimmick that sounds good in theory but rarely ever delivers in reality.
It’s just one of those cheeky tricks marketers employ to take the cash of the lazy marketer on a monthly basis. It appeals to people who think that they’re going to cheat and take someone else’s hard work for themselves. I have issues with the creators of these tools from a moral stand-point too. They are promoting that we dirty the Ad space with bullshit copies of ads going to copies of other people’s landing pages. Google has to constantly slap even the legitimate advertisers just to clean up the mess of these people.
Recently, I decided to do some research of my own to find out what it is exactly that Spy tools do to appear like they are giving you the secrets of the top dogs in your pay-per-click market.
I picked up as an example, the SpyFu tool popularly known for many years. There are other examples though, and they operate in a very similar way. Examples include, Keyword Spy, PPC Web Spy, and Google Cash Detective.
Right away, I saw their method involves running a “bot” or a computer program that sits around the net all day running fake searches for different keywords.
Now, you might not be advertising yet on the keyword you want to spy on, but your active ads are still being triggered by these bot-searches. Imagine with all of these different bots from the different Spy Tools all running searches on your keywords and racking up impressions on your ads. Now, let’s assume that they never actually initiate a “click” action on your ads so it won’t cost you any money that way.
However, the act of “searching” racks up impressions on your ads. Impressions that don’t result in clicks…which translates to reduced Click-Thru-Rate. Consider, that Google and other search engines penalise such ads that are displayed often without clicks. Ad position goes down, click cost goes up, and quality score (which is 80% influenced by click-thru-rate) is reduced. Can we say, that this will eventually result in Google Slap for even legitimate advertisers?
Also, when you go to your favourite keyword research tool and look up the popularity of keywords you want to bid on–you’re going to see impressions heavily weighted by these spy tools. Rendering keyword research tools almost useless. Which means you’re likely to choose keywords that APPEAR popular to bid on when really hundreds of searches a day are actually initiated by these Spy Tools in their research phase. Or as they like to call it their “web scrapping” or “crawling” of the internet ad space.
The tools then store this data and keep updating it daily in a database. Which they query when you come to “spy” on someone else’s display domain.
Let’s assume that none of this bothers you. And talk accuracy of the information Spy Tools give you:
Next in my research, I went to the SpyFu documentation and read what they say about how they calculate Daily Ad Budget. This is one of the factors that customers of these spy programs find important. If an advertiser has a large daily ad spend, they’re immediate candidates for Big Boy status. These are the people you’re going to copy, right?
Here’s what SpyFu says about Daily Ad Budget:

When we calculate Daily Ad Budget, we start with all the keywords that we have seen a domain advertise on. We eliminate overlapping keywords. For example, “race cars”, “luxury cars”, and “cars” becomes “cars”. Then, we take into account the current and historical positions that we have seen the domain’s ad appear for each given keyword. Based on the position of each ad, we estimate the price that the domain likely pays for the keyword. Basically, we then add up all the custom individual keyword costs per day and we arrive at the Daily Ad Budget.

Basically what this translates to, is that they are calculating the CPC bid of individual keywords by looking at what position each ad shows up in for a searched keyword. If the position is high and the position is equally high, it would SEEM that the advertiser pays more per click. However, this doesn’t factor their quality score, their account history, or the click-thru-rate of the ad. Which will all influence the position and cost-per-click bid.

Guessing the Broad Match Algorithm

In addition, finding “overlapping” keywords can only be done as a best-guess. No one really knows the algorithm Google uses for broad match keywords. We also know for a fact that both Google and Yahoo decide to show ads especially in broad (or advanced) match based on the PREVIOUS search the user conducts. Which the Spy Tool has no idea of. So Spy Tools will never get you a completely accurate list of the actual keywords people bid on.

Ignoring Long-Tail

Next, you’ll notice that in all Spy tools, you only ever see at most keyphrases of 3 words or less. The reason is that their overlap-finding-algorithm is too restrictive and their data is only useful for high volume keywords. They, instead, lump all longer-tail keywords into a single general term. This means you’ll never get a full picture of what is going on in anyone’s account. For all you know, their money keywords come from 1000’s of low-search long-tail keywords. And you’ll be baffled why the more general term SpyFu gave you stats about doesn’t work.

Flawed Average CPC

Here’s what SpyFu says in their docs about how they calculate average CPC:

If you take the Average Cost per Click of every keyword that a domain advertises on, add them all up, and divide by the total number of keywords, you will have the Avg Cost/Click for a domain. For example, if a domain advertises on 3 keywords with Avg Cost/Clicks of $1, $2, and $3, respectively then the Avg Cost per Click for the domain would be $2.

What a load of crap. This would only work if there are exactly the same number of clicks for all keywords. And we know for a fact that even if you BID the same on your keywords, your click count that Google or Yahoo report is different for each keyword, each Ad Group, and each campaign.
Here’s a table to show SpyFu’s example:

Key Term 1

Key Term 2

Key Term 3

Totals

Avg CPC

1

2

3

Number of Clicks

1

1

1

3 clicks

Total Cost

$1

$2

$3

$6

Looks right. Doesn’t it? Now look at the table with the same numbers they get and we only change the number of clicks received for each key term:

Term 1

Term 2

Term 3

Totals

Avg CPC

1

2

3

Number of Clicks

11

13

20

44 clicks

Total Cost

22

26

60

$108

In this case the average CPC is $108/44 click =Average CPC of $2.45 not $2 as SpyFu’s method would suggest.

What About Region Targeting?

Unless Spy Tools have an international presence (which I’m sure they don’t), they gather all their stats about the web from the locations they are centrally located at. Meaning, if an advertiser gets most of their leads from Australia while the Spy Tool operates out of Arizona, USA it will not be able to tell you that the advertiser is winning a lot of money with their keyword in Australia.
There are many more reasons why Keyword Spy Tools do not give you any kind of accurate results you can use. I think these are sufficient to build a case though, against using them. And for $70 a month, SpyFu’s subscription is NOT cheap. I would rather keep that $70 to get 35 more leads a month! I would rather use that ad budget to actually TEST my own ads and keywords and find out what works best for my business. So should you.
The fact of the matter, though, is that Keyword Spy tools exist and they’re not going away. And despite all my moral issues with them, I occasionally use them to get fresh keyword ideas when I have none. I do not trust any stats given about those keywords or copy the ads I see.
A good PPC advertiser knows that a lot more goes into creating profitable campaigns than just knowing who’s ad shows up the longest and who spends most. The way you group your keywords together is a much more important piece of information to know. And if someone could tell me that, maybe then I’ll pay the subscription willingly. We know that negative keywords play a huge role in the success of a campaign–the keywords that someone’s ad DOESN’T show up for–can someone tell me that? Probably not.
And next time you whip out a Spy Tool, just think–if you had spent $100,000+ dollars to find out what keywords and ads make you money–do you want some nobody advertiser to come along and take your leads over night? I think not.
Much of the material in this post came from this well-thought-out blog post on how to FOOL your competitors who think they’re smart using Spy Tools: http://www.seoptimise.com/blog/2008/09/4-ways-fool-your-competitors-using-spyfu.html
Stay original!


To learn more of Jim’s PPC advertising techniques, check out PPC Domination.

Jim Yaghi

Jim Yaghi

Foremost Home Business traffic expert, Jim Yaghi is a Computer Scientist and Mathematician who used to build search engines for a living. At 16 he created a mildly popular social network and has been an online entrepreneur for over 15 years. In 2006 he rose to the #1 Affiliate rank in many Home Business programs (most notably Magnetic Sponsoring). Today he's best known for hatching the first industry-wide viral campaign to reach all major social networks, for hosting a top-10 Internet radio show for entrepreneurs, and for shattering industry sales records with his best-selling, easy-to-follow online marketing courses PPC Domination, PPC Supremacy, and Traffic KickStart.

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