Using Trademarks In Online Advertising

Google recently announced that it will be updating it’s policy on trademarks to allow advertisers to bid on trademark terms where they were previously unable to.

What this means for trademark owners?

1. You will no longer be able to file complaints to Google when another advertiser bids on your brand name. Instead you will need to consult with your legal team if you have any concerns.
2. You will not be able to restrict advertisers from bidding on your brand name in search ads.
3. You can still complain to Google if your brand name is used in AdWords ad copy
4. You will still need to monitor the use of your trademarks to ensure hey are not being misused. You can monitor this using a tool like the Search Monitor.

Why this is great news.

This is great news for advertisers – particularly those with e-commerce stores. The issue has been that many e-commerce stores have been unable to bid on some branded terms, even though that they sell the brand.

Previously the only way around this restriction was to request that the brand owner (often a manufacturer) completes a form that allows the e-commerce store to bid on their brand.

This meant that some manufacturers / importers could restrict their distributors from advertising and bidding on their brand online.

In one particular case, a manufacturer decided not to approve a request from an e-commerce store to bid on their trademarked brand name. It was refused on grounds that  giving them permission would give them an unfair advantage over other retailers who sold their brand.

Ironically, a few months later the manufacturer opened up its own e-commerce store and was then able to advertise their own brand without having any competition.  We wonder what the ACCC would make of that! Could it be argued that the practice is anti-competitive?

I believe that in that particular instance it was in the manufacturers / suppliers best interests to widen their distribution network by allowing retailers advertise their brands.

Where there is a grey area

In the example, we citied above using a brand name in the ad copy could be a grey area.  This is because one would assume that the e-commerce store is trying to sell the manufacturers brand and therefore it is in both the manufacturers and retailers best interests to sell the product rather than misrepresent the brand. However, feasibly the trademark owner could complain but I imagine it could be seen as anti-competitive especially if the manufacturer also has an online store.

While I am not a lawyer, I imagine that including the trademarked term in the ad copy could feasibly be OK if the ad:

• did not misrepresent the brand
• and the e-commerce store actually sold the product
• was not deceptive or misleading

It comes down to relevance and plain common sense. In example cited above, the trademarked brand name is splashed everywhere in the catalogues of brick and mortar retailers. If the trademark term can appear in catalogues, why can it not appear  in ad copy of a simple Google search ad.

Other grey areas of the policy change is that competitors can also bid on your brand name.  Therefore a company like Puma could bid on competitors brand names like Nike or Adidas.

Should you bid on your competitors Trademarks & Brands?

We are not a lawyers so you probably should consult your lawyer on this. What we do know if that branded terms tend to convert more strongly than unbranded and generic terms. Bidding on branded terms is likely to be  an effective strategy – particularly if you already sell the brand. That being said, here are some implications from a paid advertising point of view that you should be aware of:

• If you bid on competitive terms, you will almost certainly pay a higher cost per click than the trademark owner. This is because ads that are less relevant are likely to get a lower quality score and this increase the price you pay per click.
• Avoid using the trademarks in your ad copy – particularly if you do not sell the brand  or product in question. Yes your quality score will be impacted but you also need to reduce risk.
• Avoid using dynamic keyword insertion if you think there is a risk that your competitors brand name will appear in the ad. For those who are now aware, dynamic keyword insertion allows you to dynamically update your ad text with the keyword that’s used to target your ad.
• If you really want to use the trademark term in your ad copy and you actually sell the product or brand, consider using sub-domains or display URL’s with the term in them – for example www.YourdDomain.com/TrademarkTerm. We believe that there is a “loophole” where Google does not not enforce trademark usage in the display URL.

Who the policy change affects

The policy change impacts Australia and New Zealand as well as several other countries including China, Hong Kong, Macau, Taiwan, South Korea and Brazil. The change means that Google’s policy will be consistent throughout the world. The policy change follows Google’s recent win in the High Court  over the ACCC.

You can find out more about changes in Googles policy in relation to trademarks here.