A recommendation made by the Advocate General of the European Court of Justice (ECJ) could lead to restrictions on bidding on competitors' brand names and trademarks in Google AdWords.
The adviser recommended that the ECJ should rule against Marks & Spencer for bidding on keywords such as "interflora" as well as variations including misspellings of the trademark and phrase versions including "interflora flowers."
Interflora, who started taking legal action against Marks & Spencer over two years ago, has been unhappy that M&S were paying Google to appear in the Sponsored Links section of the search engine results for its own name. They argued that as M&S' adverts bore no relevance to Interflora, they were taking an "unfair advantage of [their] brand, in breach of trade mark law."
Evidently, the Advocate General agrees, stating that a brand should be allowed to stop a competitor from advertising on its own name as a keyword "in the case where that ad does not enable an average internet user, or enables the said user only with difficulty, to ascertain whether the goods or services referred to in the ad originate from the proprietor of the trademark or an undertaking economically connected to it or from a third party." In other words, if an advert could be confusing and has nothing to do with the brand keyword being searched, then they should not be targeting that particular keyword. After all, a searcher may think that M&S' advert appears when they've searched for Interflora because they're associated with each other or working together.
The potential ruling's implications
The Advocate General's ruling may be non-binding, but it is a signal that the ECJ is likely to lean in that direction and rule in favour of Interflora and against M&S. If so, this landmark case could affect online advertisers throughout Europe when it comes to competing with their competitors' names on Google AdWords.
Bidding on competitor brand terms is not new. In addition to being a practice where one brand might attempt to sway potential customers from another brand, the number of impressions a keyword receives can also provide a valuable insight into the strength and popularity of a brand on a day-by-day basis. For example, as this is typed, Confused.com, Gocompare.com and Comparethemarket.com are all bidding on each other's names:
Bidding by accident?
Perhaps the biggest implication is the ruling's effect on accidental brand term bidding. This will be an issue for phrase term brand searches (e.g. "interflora flowers," "confused.com car insurance," etc.) or if a brand's name contains or is made up of a generic product/service keyword.
For example, if M&S' advert appears for the keyword "interflora" then it is obvious that they are bidding directly on their competitor's name. However, if the advert appears for "interflora flowers," is it because they are bidding on that keyword or because they are bidding on just the keyword "flowers" on broad or phrase match? What about companies that have keywords in their name, such as flowersdirect or Flying Flowers?
The above screenshot shows Interflora's ad showing for a search for "flying flowers," probably because they bid on the keyword "flowers."
Admittedly, Flying Flowers may not be trademarked, but what if it were? Will advertisers be expected to add every single trademarked competitor to their negative keyword list, or only bid on exact match and therefore require an extensive exact match keyword list? Will Google step in and automatically discount popular brand and trademark names and variations? Would it even be able to, without the need to acquire a mammoth list of trademark names?
The impact on Google
Speaking of Google, the ruling will have implications for them as well.
Any restrictions on keywords will result in less money being spent by advertisers, and a restriction on this scale could make a significant dent in the amount they earn from AdWords. If advertisers stick more to exact match keywords, if they are worried about bidding on trademarks via broad and phrase match, they could see even more of a drop-off in the amount of keywords that advertisers bid on.
Is it wrong to bid on competitor brand terms?
Obviously Interflora is pleased by the Advocate General's recommendation, wanting "to protect [their brand] for our customers, florists and the future." But what do others think of the recommendation? Patrick Altoft of BlogStorm argues that it's "a win for common sense. Loads of people bid on competitors trademarks but nobody in the industry really likes it." As mentioned previously however, bidding on a competitor is more than just stealing their traffic: it can give real, accurate data on how many people search for a brand, so this information will be lost as well, with marketers having to rely on Google's Keyword Tool and Google Insights instead.
Evidently it will come down to this: those who benefitted greatly from bidding on their competitors will be unhappy with the recommendation, while those who were taken advantage of (such as Interflora) will consider the potential ruling to be fair and will help them to get the clicks that they feel they deserve.
Either way, it will certainly change the landscape for PPC advertising in the UK and Europe.