Heading into the holiday shopping season, search marketers are worried that Google's new trademark policy for AdWords will drive up costs for big brands.
"The holiday season will be a real proving ground, to see how quickly Google responds to issues," Jeremy Hull, account leader at Range Online Media, told ClickZ. "Do they have an adequate team in place, with policies and procedures that are scalable for the holidays?"
While the number of infringing ads a brand owner has to deal with will vary, the issue is amplified during the holiday shopping season, Hull said. "The fraudulent advertisers know that the legitimate marketers are swamped with holidays, and use the busy time to push out more trademark-infringing ads," he said.
The impact of other advertisers bidding on a trademark most often comes in the form of increased costs to the trademark owner, who has more competition on his trademarked terms, which drives up bid prices. There's also the issue of missed revenue, where a searcher will buy from another site advertising on a trademarked keyword, and not from the trademark owner's site, Hull said.
In May 2009, Google changed its policy toward trademark usage in AdWords ads. Previously, Google had not allowed advertisers to use trademarks they didn't own, either for targeting or in ad text, and Google was responsible for policing that policy.
Under the new trademark policy, advertisers can use trademarks they don't own under certain circumstances, such as if they are reselling a product or discussing the product on an informational site.
Advertisers that are using trademarked terms includes affiliates of a brand, who may or may not have permission from the trademark owner, and sellers of gray-market and black-market goods, who usually don't have permission.
"Anything you could buy as a knock-off on the streets of New York and rub the logo off with your fingernail...those are the same brands you are seeing victimized by fraudulent behavior online as well," Hull said. "So, major apparel, luxury, jewelry, fragrance, and other well-known and sought after brands are the hardest-hit by trademark infringement."
While gray- and black-market goods are an issue for some categories, the bigger issue for many retailers is inadequate trademark policies built into their own affiliate programs, according to Hull.
The increased competition has caused several Range clients, especially those with luxury retail brands, to see a dramatic decrease in clicks on their ads since the policy change, despite similar impression volume, Hull said.
Others have also seen an increase in cost-per-click (CPC) rates they pay for ads, according to Alison Childers, senior account manager at Range Online Media. On some brand terms, CPC rates have risen by as much as 50 percent, while clickthrough traffic has dropped by 30 percent, she said.
"Those numbers are holding true across all big brand terms," Hull said. "It's a free-for-all on brands."
What Brands Fear
Even when that's not happening, there is potential damage to the brand in the form of mixed messages to consumers, such as an affiliate using a low-cost message to sell a luxury brand, Hull said. Big brand owners go to great lengths to control the messages around their brands and align their efforts, but without trademark protection in AdWords, "they've lost control of the space," he said.
Additionally, the onus is on trademark owners find ads using their trademark without permission, and then bring them to Google's attention via an online form.
"We believe that this approach gives users more choices and access to as much information as is relevant to their search or interest," a Google spokesperson told ClickZ. "Some trademark owners support other advertisers using their trademarked terms in ad text to generate traffic and sales of their products; other trademark owners feel differently."
Google will investigate allegations of trademark infringement "as a courtesy," when trademark owners file a complaint with them. If Google's investigation finds that an advertiser is using a trademark owner's term in the ad text in a manner which is competitive, critical, or negative, it will disapprove the ad for violation of Google's policies, notify the offending advertiser, and prevent the advertiser from using the trademark in similar ad text in the future. Repeat offenders of this policy are subject to account suspension, according to Google's spokesperson.
It was pragmatic, from a business perspective, for Google to change its policy, according to Patrick Garrett, managing director of Outrider, part of GroupM Search.
"They've handed off all the legwork required to track down violators to the advertisers. They've also opened up new spending opportunities by allowing more people to buy ads on keywords that they couldn't buy on before," Garrett said.
Google basically brought its policy in line with that of other search engines. But, since Google has such tremendous volume compared to other search engines, the changes Google made in May had a big impact on advertisers, Garrett said.
"There's been an onslaught of people playing in the trademark space [since Google changed its policy]. Some are people that have the right to use your trademark, others don't." Garrett said. "We're OK with taking on the burden of monitoring our clients' trademarks, but we'd like more clarity from Google on how they're going to help us combat issues when they come up."
For instance, Garrett would like Google to make it clear what criteria Google uses when deciding whether to take down a single ad or ban an advertiser completely. It's currently too easy for an advertiser to simply create a new ad that still uses the trademark after the first one is banned, he said. Also, he said it's not clear what evidence Google wants from trademark owners to help expedite the process.
Hull agreed that clarity into Google's trademark policy is uncharacteristically lacking. "Everything else with Google is so cut-and-dried; you know the process. This seems so nebulous," he said.
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Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.
Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.
With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.