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I wish you luck. It's been my experience that getting Overture to admit to anything is almost impossible. Our company was spending $60,000 to $70,000 per year in advertising and now we're spending zero with them. It seems the people we have dealt with have been trained to represent the companies interest and wouldn't believe us when we told them that something was seriously wrong with our campaigns. We had 3 keyword issues over 2 or 3 months that wreaked of invalid click-throughs, but we were told they were valid. I can understand once maybe, but 3 times I don't think so. Good Luck!
Our company was spending $60,000 to $70,000 per year in advertising and now we're spending zero with them.
So where do you spend the money instead?
Every PPC will have competitors doing things in an attempt to sabotage your campaigns. Factor it into your ROI calculations, it will happen in every sector to every advertiser, without exception.
I've said it before and I'll say it again now, if they have nothing better to do with their time than that and you have nothing better to do than to catch them, then you both need to look at your business models.
You'll spend far more money on out of position clicks, poorly written ads, usability, not deep linking, than any amount of amount of money your competitor could spend on your behalf.
If advertisers blame Overture for this, would you blame Ping for manufacturing golf clubs if someone took a driver and smashed it through your window? Overture are merely facilitating an introduction between your site and a searcher and in the majority of cases they do a good job of it in my opinion.
Our problem with Overture was simple we had keywords that for days and months generated $20 to $30 charges at best on any given day, then all of a sudden would deplete our account balance of $1300 in 4 to 7 hours. When we talked with them about it they always (all 3 times) had an excuse for it and would stand by it. I recommended that they implement a daily limit so these types of charges wouldn't occur.
I realize that no system is full proof, but this is way on the excessive side. This is a big problem not a small one.
I come from a customer service background and I believe that you need to listen to your customers to be successful. It's my opinion that my conversations with Overture were constantly one sided and it always benefited them. To me this is a poor business model approach, and is a great way to run a short term business, but not a long term one.
In surfing (real kind) waiting in the line up and taking a wave when it is your turn is the way it works. Someone new shows up and some beaches have a friendly surfing crowd and some don't but everyone knows there is a line up and you take turns.
On the other hand, if this guy is just really asking for it, you can start bidding on bad guy's business name and really freak him out... In other words, whenever anyone tries to find (or return to) bad guy's business by search inquirey your ad ends up on top of theirs. Be sure to have appropriate wording pointing out the superiority your services... And of course you may never be able to turn your back once you turn this mean although remember you can claim you hired a new pro to handle things and you didn't do it.
I personally agree with some of the other comments that if you take all that frustration and anger and use the energy to find new ways to excell it works for you and not against you and the bad guy will just be hurting himself by fueling you up.