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When a searcher is searching for a product that we offer but is specifically looking for a competing brand, I was thinking that the searcher is likely to have done research and is looking for that branded product and not any other product. And if they are to land on our page and they can't find that branded product, then they are likely to bounce away. That's the reason I was thinking of adding the competing brand as a negative keyword.
However maybe I should be letting these searchers come to the website because they are further on in the buying cycle, they have researched a product and they may still be interested in competing brands like the one we offer? But are they?
How would you deal with competing brands where the CPC is quite high?
IMO I'm always of the belief that if a customer is looking for Ridgeback Mountain Bikes, they may also be interested in Mongoose Mountain Bikes. Deciding factors of making the final purchase often come down to price, specs and value for money.
On this basis - I don't often negative competing brand names (unless legal implications are afoot).
Best way to test this would be to set up a your competitor's brands as keywords in a separate campaign with its own budget, this way you can better control its spend and optimise it without it affecting the quality score of your existing campaigns or their budgets.