Should You Bid on Competitor Brand Terms?

Can You Bid on Competitor Brand Terms or Keywords in Google AdWords?

Let me start off by writing I’m not going to give you a simple “yes” or “no” answer to the title question because there isn’t one.  Instead, let’s take repair our chopper Zen-style and discuss what you need to know to make the decision.

The Basics of Advertising on Competitor Brand Terms

Just to make sure we’re on the same page here, let’s define what we’re talking about.  The concept is buying a competitor’s name and other branded keyword phrases (e.g. branded product  names, executive names) so that your ads will show up when someone searches for those terms.

The process works the same as bidding on any other search term.  You select the competitor term(s) you wish to bid on, set how much you’re willing to pay, and set up ads for that ad group. Voila, you can have your ad appear when someone searches for your competitors.  There’s no cost to you until and unless someone clicks on one of your ads.

The Search Engines Let You Buy Competitor Names?

Yes, although it wasn’t always that way.  You didn’t used to be able to do it with Yahoo! Search Marketing, for example.  And the search engines have changed their trademark advertising policies several times.

Since Google and Microsoft are the only major players left in the US, let’s look at their current trademark policies.

Google AdWords Trademark Policy

Google AdWords only blocks use of trademarked terms in the ad copy and does not prevent advertising on the keywords themselves*.  If you’ve filed a general trademark complaint with them (or a specific trademark complaint against one or more specific offenders), they can block and/or remove ads with the trademarked terms.

* There are currently 9 mostly Pacific region countries where Google will actually investigate and possibly block competitors from advertising on the trademarked keyword.  These are Australia, Brazil, China, Hong Kong, Macau, New Zealand, North Korea, South Korea, and Taiwan.  Additionally there are slightly different rules for European Union and European Free Trade Association members.

Be aware that Google made changes awhile back to allow resellers and informational sites to use your trademarked term in their ad text in the US, UK, Canada & Ireland provided that the ads:

  1. Use the term in a descriptive or generic way and are not referencing the trademark owner. Or,
  2. Use the trademark in a “nominative manner” to refer to the trademark owner in one of the following 3 ways:
  • Resale.  The landing page must sell or facilitate the sale of the trademarked item.
  • Sale of components, etc. that are related to the trademarked term.
  • Informational sites, which do not sell the product itself.

Microsoft adCenter Trademark Policy

Microsoft adCenter made a major change to the intellectual property guidelines in March.  The history is a little confusing to follow because they used to have a more restrictive policy, then switched to Yahoo! Search Marketing’s trademark policies when it took over their system as part of the Microsoft-Yahoo! Search Alliance, which consummated in 2010. This Yahoo! policy they carried over was extremely friendly to trademark owners as trademark terms were automatically disapproved for competitors in most cases.

Then in March of this year, they switched to a new policy much more in line with Google AdWords.  That is, they don’t get involved with keywords.  Like AdWords, they also will investigate your trademark complaints over use of trademarked terms in ad copy.  They will, however, allow trademark terms to appear in ad text in “fair use” cases such as:

  • Use by resellers
  • Informational Web sites like product review sites
  • Ordinary “dictionary” use
  • Comparative advertising, as long as a 3rd party backs up your claims

Read their full US policy.

Is It Legal?

Who’s to say what’s legal?  Oh, I guess courts can.  Well, so far, courts have pretty much backed Google on this one when companies have sued them over their competitors buying their names.  The most reasonable argument that the courts have considered is whether or not it creates confusion.  Since the search engines don’t allow you to (or at least have a policy in place to say you can’t) use the trademarked term in your ad*, then it shouldn’t be confusing, right?  Well, the courts have found that pretty compelling.  And if your competitor’s name or other branded term isn’t trademarked, then there’s no issue at all as far as the search engines are concerned.

* Be aware there are ways to get around this with keyword insertion and display urls.

So, since the courts have basically backed Google and because they have more attorneys than Romania*, companies mostly just sue each other now.  So how’s that working out?

* may not be true, but my money’s on Google.

Turns out, pretty good for the poachers.  Here’s a very recent decision:

A judge in Wisconsin appears to have given the greenlight to search marketers who want to use people’s names to trigger pay-per-click ads.

Milwaukee Circuit Court Judge Charles F. Kahn, Jr. this week dismissed an invasion of privacy lawsuit by personal injury lawyers at the firm Habush Habush & Rottier against attorneys at the rival firm Cannon & Dunphy. The privacy claim stemmed from allegations that Cannon & Dunphy used the names Habush and Rottier to trigger search ads for its own firm.

The law firm’s claim was based on a Wisconsin state law allowing suits for invasion of privacy if their name is used for commercial purposes without their permission. If that use is “unreasonable,” a judge can issue an injunction banning it.

Kahn ruled that Cannon & Dunphy’s use of the rival attorneys’ names wasn’t unreasonable for several reasons, including that it wasn’t likely to confuse searchers. “Internet users, and consumers in general, have learned to be skeptical about the first impression they may receive from a web page or commercial advertisement,” he wrote.

By the way, if you’re really into this sort of thing, check out Eric Goldman’s Technology & Law blog.  It’s the single best source on the Web for following these types of lawsuits regarding search engine marketing.

 Can You Bid on Competitor Brand Terms or Keywords in Google AdWords?

Should I Bid on My Competitor’s Name?

From personal experience, I can tell you that advertisers have really strong gut reactions to this question.  Some find the thought offensive and would never do it.  Others think all’s fair in love and war.  And some straddle the fence – only doing it when it happens to them or for that one competitor they really, really can’t stand.

 

If you feel very strongly one way or the other, just go with that.  But, if you’re on the fence or haven’t made up your mind, here are a few things to consider:

Pros

  • It can work.  A lot of times people are interested in that competitor for a specific reason that won’t help you at all: trying to get hired, a vendor looking up directions, etc.  But for the consumer doing research – or maybe a current, unsatisfied client looking up a phone number, the pay off could be handsome.
  • It will jerk their chain.  Double edged sword here (see Cons), but after seeing your ad on their name, internally they may devote a lot of executive resources figuring out what can be done.  Plus, some people just really, really like ticking off their competitors.
  • More competition should drive up their prices to bid on their name. While this means they’ll be spending more money they could be devoting elsewhere, their Quality Scores will likely be so much higher than yours, that the additional cost may not add up to much.  Unless they weren’t advertising on their name at all before and decided to start doing so because of your ads.

Cons

  • Your time.  Your competitors may call you up and chew you out about this.  Trust me, I’ve seen this time-suck happen and had advertisers flip their feelings about bidding on competitor names 180 degrees.
  • Money.  They may sue you or threaten to do so.  While you could just adhere to their cease-and-desist and potentially be done with it, most companies will at least consult their attorneys about this.  And if they don’t happen to be experts in search – and virtually none are, this can get really expensive.  (BTW, we have consulted with attorneys about this in the past.  If you’re an advertiser or lawyer needing help with this, give us a shout at 800.979.3177.  We can also advise on how to broker a fair peace accord without the courts).
  • They may start advertising on your name, which could send up your costs somewhat and also decrease your click throughs.

What ends up happening sometimes is that – whether mediated expensively through attorneys or done from President to President – a truce is called.  The downside is that it needs to be brokered with each competitor as it can’t be done through the search engines (other than if there’s a legitimate trademark complaint to be filed).

Are My Competitors Advertising on My Name?

One final note – you may be interested to know if your competitors are advertising on your name.  The first place to start is just to do a search and see.  But there are some complications with that, such as:

  • They can block your ip if they can figure it out.  If you have a dedicated, named ip, this would be extremely easy to do through their analytics.  You don’t want to do all the searches from home at night, do you?
  • They may only show during certain times of the day – or days of the week – by design.  Or, because of how budgets get spread out if not on an ‘accelerated’ spend, Google and Microsoft will spread out the impressions.  That makes for a decent chance you simply won’t see their ad even if they’re trying to advertise at that time.
  • Unless you’re both selling locally only, they may very well be showing their ads throughout the US (or world) everywhere except for your location.

For these reasons and others, if you are extremely concerned about monitoring competitor bidding on your name and other trademarked terms, you should look into outsourcing this issue.  Search engine marketing agencies should be able to handle this service whether or not they are running any paid search campaigns for you.

For example, we will create a custom reporting system for you to ensure we’re catching competitors bidding on your terms and alert you to what’s being done.  We can also evaluate the ads to see if a trademark violation has in fact occurred and, if so, file a complaint on your behalf to Google AdWords and Microsoft adCenter.  If you’d like to learn more, please give us a call at 800.979.3177.

Justin Seibert

About The Author

Justin Seibert is the President of Direct Online Marketing. Justin holds a Bachelor of Arts from Vanderbilt University. He contributes a wide range of online business-oriented topics, including the subject of exporting. His contributions can be found on publications such as the Pittsburgh Business Times, Advertising Age, SES Magazine, and La Voz del interior. Justin and his family enjoy learning about new cultures during their travels.

View Justin's full bio.
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