Trademark Infringement Issues For Pay-Per-Click (PPC) Advertisers

Yahoo has just announced they will no longer tradeonlinemarket PPC advertisers to advertise or bid on trademarked terms.

Could this be a trend of things to come from the other major search players?

MSN’s new adCenter (still in beta) states you are not allowed to infringe trademarks within their editorial guidelines (see policy below).

However, Google still maintains a strong stance in allowing advertisers to bid on trademarked search terms as long as the trademarked term is not used within the advertiser’s ad-copy.

Numbers to Consider

Next to click fraud, trademark violations are the second largest concern to Pay-Per-Click (PPC) advertising. Out of the total number of searches online, 20% are trademark searches. Meaning, company owned trademarks such as “Pontiac”, account for 20% of all search traffic. While 1 in 5 searches for trademark terms may seem high, most conversions do not originate from trademarked terms. A study by comScore and Yahoo Search Marketing (Overture) found most buyers do not search by manufacturer or product name. Rather, buyers use broad search terms that do not include a manufacturer’s name. Broad search terms account for 70% of total searches and 60% of total conversions.

Search Engine’s Policy on PPC Trademark Bidding

Yahoo on Trademarks:

“On March 1, 2006, Yahoo! Search Marketing will modify its editorial
guidelines regarding the use of keywords containing trademarks.
Previously, we allowed competitive advertising by allowing advertisers
to bid on third-party trademarks if those advertisers offered detailed
comparative information about the trademark owners’ products or
services in comparison to the competitive products and services
that were offered or promoted on the advertisers’ site.

In order to more easily deliver quality user experiences when
users search on terms that are trademarks, Yahoo! Search Marketing
has determined that we will no longer allow bidding on keywords
containing competitor trademarks.”

MSN AdCenter on Trademarks

“Microsoft requires all advertisers to agree that they will not bid on keywords, or use in the text of their advertisements, any word whose use would infringe the trademark of any third party or would otherwise be unlawful or in violation of the rights of any third party”.

Google AdWords on Trademarks:

“Google takes allegations of trademark infringement very seriously and, as a courtesy, we’re happy to investigate matters raised by trademark owners. Also, our Terms and Conditions with advertisers prohibit intellectual property infringement by advertisers and make it clear that advertisers are responsible for the keywords they choose to generate advertisements and the text that they choose to use in those advertisements.”

Solution or More Problems

With all Engines moving toward a TM standard, it would have many benefits to both advertisers and searchers. This standard would be good for marketers who would have to be more creative in their copy creation creating increased demand for qualified marketers which would translate into higher fees. Search Engines hosting the ads would maintain revenue levels, but online public relations firms may lose as they would not be required to police search engines for their clients with trademarks. Lastly, the mark owner would continue to be protected and user experience would not be affected.

Case Study:

I’m currently working with an AdWords client in a circumstance where their competitors are bidding on their trademarked search terms. Aside from the constant policing and reporting for trademark violations used in the ads themselves, adspend to secure top positions for their ads has skyrocketed from an initial $2.00 per click to $15.00 per click. Additionally, monthly spend has increased from $1,200 to nearly $30,000.

I have to go back to my client with an estimated budget of $500,000 for the rest of this year to control the space for their own branded trademarked term. I am reluctant to do that as it doesn’t make sense with the announcement from Yahoo on their new trademark policy. Given the level of aggression by the competitors and the extortionate cost now been borne by my client there is only one solution and that is to stop all advertisers from bidding on the terms. In my opinion, it is simply not right that a business owner has to spend $500,000+ to buy their own branded term that has already cost them millions of dollars to build. This is $500,000+ in revenue for Google which is being generated by a policy that is beyond elementary business terms. Yahoo and MSN have recognized the injustice of this policy and have taken steps to change it.

If we cannot treat this policy on a case by case basis, then I have no alternative than to advise my client that we cannot help them any further and their only option is to resort to legal action against Google.

Google also advises that you take the matter up with individual advertisers which in many cases are impossible with private registrations and foreign companies. You could add to your high costs dramatically to have to send cease desists to all infringers. Many will ignore you.

The classic bait and switch does not seem to apply to the Internet. Many companies are okay with their terms being bought for comparison shopping and by re-sellers. The solution here is for those companies to give permission to Google to allow their re-sellers to purchase the name. With the strength and sophistication of Google’s technology how difficult can this be? I doubt it is any more cumbersome than filtering search results for China.

Your Defense Against Trademark Violations

Website companies where the majority of their revenue is generated through online sales depend heavily on search engines to generate traffic to their website. In order to defend against trademark infringements you will need to conduct search audits at least once every month. You not only need to look over organic search results, but also paid search results or PPC contextual ads. You should look through the top 30 results of the search listings.

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