You can't analyze your competitors, if you don't know who they are. In some cases identifying your competitors is very easy ‐ for instance, if you have an offline business and you know your competitors there, just check their sites and you are done.

However, in other cases, identifying your competition isn't that easy. Your competitors could be sites in your niche, sites that rank well for your major keywords, or direct competitors for your long tail keywords, etc. The list of your competitors might be a pretty long one and obviously you can't monitor all of them. Perform a search with Google about your target keywords and make a list of the sites/companies that pop high in the search results. You can consider these to be your main competitors.

2 Visit Your Competitors' Sites and Analyze Them

After you have a list of your competitors ‐ or at least the major ones ‐ the next step is to visit their sites and analyze them. You should be watching if their sites are designed professionally, if they have much content, what the quality of their content is, whether they use static or dynamic URLs, etc. This basic site inspection can give you a lot of information about how professional your competition's Web presence is, hence how likely or unlikely it is search engines to love them.

3 Analyze The Keywords Your Competitors Use

Keywords have always been the most important factor for SEO success. This is why you can expect that if your competitors are using keywords properly, their site will rank well in search engines. You might have some difficulty identifying the keywords your competition uses because what you think to be top keywords for your niche, might not be on their list at all. If you don't know which keywords they use, try checking if they use your keywords ‐ this is more than nothing.

Alternatively, you can use the Website Keyword Suggestion tool to check which keywords are supposed to do well for their site. While doing the check, you might find many useful keywords you have skipped and start optimizing your site for them.

You should also check the keyword density of your competitors' keywords. The Keyword Desnity Cloud tool will help you get an idea. Also, don't forget to check the location of the keywords ‐ i.e. are there keywords in the headings, metatags, image tags, the URLs, etc.

4 Check the Competition's Backlinks

Backlinks are the other backbone of good SEO rankings. This is why you need to thoroughly examine the backlinks of the competition. Look for their number and origin, anchor text, etc. and you will get a clue how your competition is doing on this front. Very often you might get some backlink ideas for you ‐ i.e. if you see that your competitors have backlinks from popular sites you didn't know about, contact the webmaster of the popular site to see if you can get backlinks from them, too. The tools you can use are free and some of the best are: Backlink Anchor Text Analysis and Backlink Summary.

5 Check Other SEO Factors

Keywords and backlinks are important but they aren't everything. In order to get a thorough idea of how your competition is ranking, you need also to check your competitors' Page Ranks in Google and how they perform in Yahoo and Bing. You should also look at the number of indexed pages the sites of your competitors have with search engines.

6 Evaluate Your Competition's Presence on Social Media

Social media tend to drive lots of traffic to a site. This is why you can't skip a check how your competitors are doing on social media. Unfortunately, this check is harder to perform. Social bookmarking sites are one of the types of social media and you can start your research from them. Have a look at some of the major social bookmarking sites to see if your competitors have posts there and how popular these posts are.

Twitter and Facebook are two other huge sources of traffic. You can browse to see if your major competitors have profiles at these sites but unless you make friends with them, you will never know what exactly they post. Still, if their profiles have publicly available sections, this gives an idea of what they do on Twitter and Facebook.

7 Analyze How Your Competitors Are Using PPC Ads

Many businesses have figured out that using PPC to drive quality traffic is cheaper and more efficient than optimizing to rank well in natural search results. Google Adwords is the preferred choice for PPC but there are also other networks many webmasters will use. One of the best tools, though it is limited to Google Adwords only, is the Analyze Competition tool by Google. It allows to compare how your PPC is doing in comparison to your competitors' campaigns.

Monitoring your competition is a never ending task. All the activities listed in this article are quite time consuming but if you don't want to be left clueless about the world around you, you do need to take the time and perform the analysis. Even if you see you can't beat the competition, you will certainly learn from them and this will help you be more efficient in your own SEO efforts.