Targeting your competitor’s brand name – shady practice or just business?

The ethics of bidding on your competitor’s brand name or trademark keywords in paid search ads (the ads which appear above the organic search results on Google) has been a longstanding argument in the marketing and pay-per-click advertising industries. You may have been told that this common tactic is a great way to increase your brand’s visibility – and what could be wrong with tapping into a share of your competitor’s customer base? That’s business after all.

Picture this: you’re in the shopping centre, just about to walk into Boots. Boots is the only shop which sells your favourite shampoo. Suddenly, a Superdrug sales assistant blocks your way, waving her arms up and down. “Come to Superdrug!” she shouts, desperately trying to weave you towards the Superdrug door opposite. “We have sun lotion and soap!”. You don’t need sun lotion or soap and try to get around her. You’re so annoyed about being distracted from your shopping that you forget what you were heading to Boots for in the first place. You quicken your pace and make your escape from wide-eyed Superdrug girl, leaving the shopping centre empty handed. Sounds like a ridiculous scenario, right? Nobody (we hope) would do this in real life. So why do it online?

If you run a Google AdWords campaign and you bid on your competitor’s brand name keywords, this is exactly what you are doing. While it might be tempting to muscle in on a rival business’s action by diverting traffic away from their site to yours, it’s a desperate and visionless move which could hurt your brand image far more than you realise.

As demonstrated in the Boots vs Superdrug example above, when people are searching for a particular brand name they are already focused on buying from them. This means that in order for you to “steal” that sale, you need to do the hard sell – why should they buy from you instead? How can you convince them of your own brand’s merits and dissuade them from buying from your favoured competitor? What sets you apart? Those are a lot of questions to be answered in one small ad. It rarely happens.

What it does do however, is signal to your competitor that the gloves are off. Your competitor may retaliate, which could turn into a bidding war, and depending on what advantages your competitor has over you, could backfire spectacularly – losing you sales. That wasn’t the plan, was it? Not only that, it’s a bad use of advertising budget. When you bid on irrelevant search terms, these aren’t useful for the user and result in a poor click-through rate. This impacts the quality score of your ads, drive up your site’s bounce rate and results in a poor conversion rate. And unless you have your competitor’s brand name on your landing page (which is unlikely) Google will penalise you for your irrelevancy.

We have encountered this lazy marketing strategy which has impacted some of our clients recently, one of whom is Excel Vending. This does little to harm Excel’s business, only showing that this particular competitor isn’t bothered about being seen to be riding on Excel’s coat tails. Do you want your business to be viewed in this way?

Targeting your competitors brand name could also have legal implications. The most high profile example of this has been the long running legal wrangle between M&S and Interflora. In 2008, M&S bid on ‘Interflora’ and other related keywords in Google AdWords so that when a user searched for Interflora, M&S flower delivery service adverts would be displayed, although the word ‘Interflora’ did not appear in the ad itself. Interflora then sued M&S for trademark infringement. The High Court ruled that by bidding on ‘Interflora’, M&S led the average internet user to incorrectly believe that M&S’s flower delivery service was part of the Interflora network thus resulting in trademark infringement. The decision was then overturned by the Court of Appeal as the court was found to have made errors of law and it has been returned to the High Court for a retrial, with the case still ongoing.

It’s important to note that bidding on a competitor’s trademark does not in itself constitute a trademark infringement but the difficulty in determining what does constitute a trademark infringement depends on the facts of the case – such as what the ad says and what page it leads to. It’s a developing legal area currently and the key message is that it is not a risk free strategy – and it’s worthwhile considering whether the competitor whose keywords you are targeting has the resources to sue you!

Overall, forget shady practices and grey areas – at fatBuzz we think your marketing efforts should be focused on providing useful, relevant content for your customers and anticipating and answering their questions instead of tit-for-tat games that will not only cost you money and mislead potential customers but could land you in hot water.