Google’s ACCC victory raises questions for brands

Last week saw Google win its on-going trademarking case with the Australian Competition and Consumer Commission (ACCC). As in recent cases across the world, such as the UK’s Marks & Spencer vs Interflora, the question has been around whether brands are misleading consumers when they show their ads on searches for competitor brands, and crucially, if Google as the intermediary is responsible for the (potentially) misleading activity.

The Australian High Court ruled in Google’s favour, putting the pressure on advertisers to marshal other advertisers, not the media owner.

Chief Justice French and Justices Crennan and Kiefel said: “Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers”.

Google trademark image

Reception across the industry has been mixed, with many seeing it as a watershed for brands to start activity targeting their competitors’ core brand terms, keywords which normally afford the lowest cost per click (CPC) for the brand and are key to driving efficient sales. The worry is that if Google now relax their trademark regulation and brands are allowed to target their competitors, by entering the auction, the competitors will not only direct traffic elsewhere, but also push up the CPC by the incumbent brand owner – a double hit.

Lost clicks

To cover off the “easy” one first, for me, this is simply a question of how stupid do you think your customers are and do you rate your own product enough that they won’t be tempted away at the very last minute? It’s a little trite, but I view this as the same as a man with a sandwich board stood outside your store or restaurant. Yes, a handful of people will see the ad, change their mind and go elsewhere, but using say, McDonalds, as an example, do people heading into McDonalds, on seeing a man outside with a board really think twice and change their mind and head to Subway down the road? Do people searching on Google really not know the difference between one ad and the next? Is your product so poor that it can instantly be replaced by a competitors’ if they see an ad at as late a stage in the purchase funnel as searching for your own brand?

Looking at Hitwise data from a number of previous instances of competitors starting to bid on clients’ core brand terms, I would suggest this is unlikely. If any, the dip is usually minimal. Added to this, any loss of traffic could potentially be put down to people who may not have converted anyway – I have often seen conversion rates slightly increase when traffic slightly decreased as a result of a competitor entering the auction.

 CPCs

This is a little more difficult. Yes, there is a very real chance that the increase in competitor activity will drive up CPCs on the core brand terms – I have seen this happen on multiple clients who have had competitors enter the auction for a consistent amount of time.  That said, we need to take it with a slight pinch of salt and remember:

  • Due to the inherently lower level of relevancy between, say hungryjacks.com.au and mcdonalds.com.au to the keyword [mcdonalds], bidding on competitor’s brand terms is always going to cost the competitor advertiser many times more for the clicks. For the vast majority of advertisers, this will not be efficient in terms of cold, hard conversions so, while they may dip a toe, it is unlikely to last.
  • However far they change their rules, Google will still have very strict trademark rules to state that in order for an advertiser to use competitor’s brand term, it must show direct relevancy within the first two pages the ad directs the user to. There is no change to this based on the ruling therefore any competitors who cannot offer this level of onsite relevancy will struggle for relevancy in their ad copy and their Quality Score will suffer and, as above, any short term tests are unlikely to last long.

If there’s a particular type of “competitor” who are likely to cause trouble on the back of the ruling it are affiliates and re-sellers, however, this ruling should not change the rules of engagement in these relationships:

  • Affiliates should be given clear rules over what they can and can’t use in copy and which keywords they can bid on.
  • Resellers cannot, legally, be contacted over their Google activity but should be monitored and have trademark agreements in place for only the most important partners.
  • Account teams should use competitor monitoring tools to monitor activity of both rogue affiliates and competitors, with relevant action taken to remove advertisers who break the rules

What is important to point out is in the UK when the similar ruling was made and Google changed its trademarking rules, it was a two-step process – with the first, the removal of trademark policy on keywords but still maintained on Ad copy, then at a later stage, the total removal of the trademark policy across both searches and ad copy. Introducing that kind of change to the Australian market will take time and we can be prepared for it.

Even when the changes come into action, I don’t foresee a great shift in advertisers’ behaviour with respect to competitor bidding but, it is important for advertisers to:

  •  A Brand campaign – If it’s not already part of the strategy, build a brand-protection campaign that clearly directs consumers to your site rather than the competition
  • Prepare for the worst – build a plan for how you will manage if competitors swarm onto your brand: forecast what will the change in metrics may look like; will you retaliate (not a good idea) or change your bid strategy? Are you making the most of all of Google’s ad extensions to own as much of the results page as possible?
  • Invest in monitoring technology such as Adthena, Adgooroo and the tools available from Google to get the clearest possible picture of what their competitors are doing in the results pages.

As a final point, I think it is also important to mention that as and when the trademarking rules on Google are relaxed in Australia, it does help many retailers – no longer having to go through the lengthy process of requesting white-listing for the products a reseller legitimately stocks, will free up a lot of time on both sets of the retail table.

I would never recommend bidding on a competitors brand as, in general it does nothing other than line the search engines’ pockets with clicks for irrelevant traffic but others certainly will at some point. I’m confident however, so long as account teams are vigilant and have plans in place, there shouldn’t pain can be minimized.

Source: http://www.smh.com.au/technology/technology-news/google-claims-victory-in-accc-court-battle-20130206-2dxi8.html

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