Question

Topic: SEO/SEM

Using Competitor's Brand As Your Paid For Ad-word

Posted by steven.alker on 9/26/2005 at 7:28 PM ET 500 Points
Hi Everyone

I have a problem with some advice asked by a valued client. It’s beyond my usual areas of competence and I’m hoping that you can give me some guidance.

The client provides an excellent printed product which his company supplies to end users, almost exclusively via advertising agencies and other creative agencies.

He markets to these channels by direct mail, with samples of his product and has so far decided to pursue growth in his business by developing relationships with two or three thousand agencies in the UK. He also has an excellent website which has the potential to attract direct end-user business but at the moment acts mainly as a shop window for the agencies which receive his direct mailings.

Obviously, if the website can attract the end user directly, he will be in a position to secure opportunities to quote for their business, when their existing agencies might, by default rather than by intent, simply ask his competitors to provide a quotation and then give them the business.

He can manage any potential conflicts with agencies because he runs the entire operation through one of our CRM systems, so, if for instance Coca Cola were to come to him for samples and a quotation, he would still be able to liaise with their creative agency to keep them in the loop and potentially to secure further business from that agency because they would then be well and truly aware of the quality of his product.

Let’s call his product N Cards, which are innovative printed advertising products with some unique, patented features. The brand, “N card” is registered and protected. Let’s also say that his main competitor produces a slightly different product called S Cards. S cards are not quite so innovative, but the name is registered as a trademark. They also have the advantage in that they have a much longer history in the market and the brand has become well known.

The “S Card” has in fact become a generic term for this kind of print media, rather in the same way that people started to call any vacuum cleaner a Hoover (Or a hoover with a small “h”). He has discovered that when his clients and prospective clients look to this type of advertising medium, they even refer to his product (The N Card) as his “S Card”.

So, he’s purchased the ad-words on Google and MSN for all the variations of the word “S Card” or “Ess Card” as it is sometime known (Not trademarked) and so on. The effects on hits on his website have been immediate. People really do search for this type of advertising medium by assuming that everyone who makes one or something like it calls their own product an “S Card”.

Apparantly the competition are so complacent and dim that they have not even tried to go for SEO or ad-word purchases. So buying “S card” from under their noses was a low cost exercise and hasn’t yet registered with the owners of the S Card brand.

I have to question the legality of this, the consequences with the search engines and the commercial sense in the short term and the long term.

Firstly, he is not promoting his site for his N Card by sticking in spurious meta-tags for his competitor’s product, so searching for the S Card is not going to produce a hit on his site via natural rankings thanks to clandestine key-word placements. I believe that this sort of behaviour used to get sites de-listed by the major search engines. I want to suggest that he could get a hit on natural searches were he to add a page expounding the advantages of his card over the competition, referring not to the competitors “S Card” but generically to the “S type of Card”

Could he then plug “S Card” as a search term to his heart’s content?

Secondly, is he infringing anyone’s trademark or copyright by purchasing and using his competitor’s product name to produce paid-for per click listings? If his competitor really was called S Card, at the moment, of you Googled “S Card”, you’d get my client’s website in the paid-for box, not the owner’s site. They come in somewhere on page 212!

Do the owners of S Card have any legal case against him?

Will Google or MSN get annoyed because he is drawing traffic to his site by using a competing brand as an ad-word?

Even if this is legal, what are the other possible consequences? I’m not naïve enough to think that the competitors will be thick enough for long enough not for someone on their staff or perhaps one of their clients not to spot the fact that this guy’s website comes up in paid-for advertising every time they look to see how their site is ranked. I can envisage all kinds of retaliatory measures such as paying for some low-cost outfit in the Far-East or India to simply run up a big bill for him. What do you think?

The guy does make a valid point – the competitor’s longevity in the market has made their product, trademarked as it, is a generic term in the B2B print media industry. The big question is, what is he letting himself in for by pursuing this ad-word strategy?

From a personal standpoint, I’m happy to pass on advice to the guy. He won’t hold me liable if it’s misguided or even wrong – we’ve worked together for long enough to be able to have that kind of trust and I’m not doing this one for a fee (I must need my head examining) or as any part of my support contract.

I’m uneasy about the ethical standpoint of using ad-words in this way, but if it’s legal and he’s just stolen an advantage on them, then maybe its power to his elbow. They’ve done everything they can, and some of it barely legal, to drive him out of business.

All advice will be welcome on the legality, the morality and any other things ending in “ity” that you can think of as well as the commercial sense. Everything about this seems to be fraught with complex ramifications, which is why I usually stick to Databases, CRM, Chaos Theory and Quantum Physics.

Best Wishes


Steve Alker
Unimax Solutions
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RESPONSES

  • Posted by Peter (henna gaijin) on 9/26/2005 at 8:46 PM Accepted
    A company I have worked for also used competitor's company names and product names as AdWords keywords, with great success. These were usually the best producing words.

    For a while, Google would not allow it, so we had to stop. But I read a while back about some ruling saying that you can use the keywords to call up the product, so long as your ad is clear that it is not that company's product.

    That all said, it seems the issue is still rather unclear legally. Here are a few articles I found - https://www.clickz.com/news/article.php/3448871
    https://www.google.com/tm_complaint_adwords.html

    The trademark issue comes down to whether customers would be confused such that they think your ads are for the company who owns the trademark. Using the trademark as a key to call your ad up shouldn't be a problem in itself. What you write in your ad is where the problem could come. Just make sure your company name is there and you should be fine, I would think. But also keep an eye on the news to see if the future cases bring a clearer resolution to this.
  • Posted by ReadCopy on 9/27/2005 at 9:44 AM Accepted
    It isn't a problem as long as there can be said to be a legitimate reason why the competitive term is used.
    In your example, as "S Card" has become a "normalised" or "generic" term, then I would say that it is legitimate to use.

    It would also be legitimate if your client promoted themselves as "more cost effective than S Card" for example ... in this example, using PPC on S Card WOULD also be valid :-)
  • Posted by Nolan on 9/27/2005 at 10:44 AM Accepted
    Having dealt with some trademark issues at HP (we are very careful about the use of "LaserJet" for example, by always having "HP" and "printer" connected to the name) I know a little of what you might be facing. Some companies work very hard to protect their brands from becoming generic (like Kleenex, Xerox, Coke, etc.).

    However, if EVERYONE calls something an "S Card" instead of the generic term AND this competitor isn't working to protect that brand name, then you could easily argue that it is a generic term and no longer a brand. The "S Card" company will not be able to legally defend it in court if they one day realize that they've lost a valuable brand, especially if they're not doing things like saying, "the XX company S Card brand advertising media" and "S Card is an XX company trademark." If they themselves are using it generically, then they've lost the right to protect it.

    If that is the case, you shouldn't be concerned about using the name as part of your meta tags. It sounds like you're being very careful about not trying to claim that YOU are the S Card maker, and that is very good.

    However, even if the S Card trademark was protected and strong, using a competitive name to generate search engine hits shouldn't be wrong. Many ads legally claim, "we're better than brand X." Dell often says, "We're 30% cheaper than HP!" and while HP doesn't like that, it is all legal competitive marketing, as long as it is backed up by some kind of research and fact.

    I have to say, I'm very heartened to hear you worry about the ethical implications of this. Much too often ethical issues are the last thing on people's minds--until the lawyers call!
  • Posted by steven.alker on 9/28/2005 at 5:39 AM Author
    Sorry not to have been back with some immediate feedback on some excellent and most helpful comments – hectic day yesterday.

    Peter: Your experiences are very relevant and the links proved most useful, but there appears to be a dichotomy between what you feel should be allowable and the basic rules Google set out in their voluntary arbitration procedure. In the latter, they seem to dissuade advertisers or sponsors of key words from actually sponsoring a trademarked key-word – even if the text in the advert acknowledges or avoids the use of the trademarked word. Still, most useful – I wasn’t even aware of the Google rules.

    From the link to the legal proceedings, this is obviously a grey area in the courts, but a lot of the info provided lead to holders of trademarks attempting to take action against Google for facilitating alleged infringement of trademark, rather than against the companies which actually took out the sponsored word in the first place. Its still confusing, but that’s what I expected - I think that a value judgment will be a large part of the answer and not the Ernst and Young type of value judgement of “If the profits exceed the fine, then get off the Sh**ter and do it” (Strange but true paraphrase of a quotation from a senior partner who’s probably heading for jail!)

    Rnorth3: Thanks – the lawyer speaks and your reference to Lisa’s article was great. I knew that I had read it but couldn’t remember where – that’ll teach me to Google my desktop more often! I’ve referred the article to the client so that he can get a perspective from the holders of the trademark – whether he feel’s it’s become generic or not. Here, I think that we can get a perspective on what is right and what is wrong by considering the extremes.

    For instance, I can’t imagine Coca Cola letting Pepsi get away with paying a shed-load of money to sponsor their brand name in order to bring up a Pepsi website, even if it contained carefully crafted words such as “51% of children preferred Pepsi to Coke in a study of Fat Kids carried out by-------” or whatever. Whoops, that’s a strong letter from both Pepsi and Coke on its way to me!

    Does anyone remember the time when McDonalds dropped Coca Cola and substituted their own brand? Coke sent out teams of inspectors who queued for their burgers and fries and asked for a Coke. When served with a McDonald’s Cola, they didn’t complain, just sued.

    I have to admit, that I don’t understand the relevance of the second link – to my non-legal brain it appeared to be about the generation of revenue by trademark infringement rather than the infringement itself. The link within the article you referred to, which might have explained things came up with “No data” Perhaps you could clarify?

    AndrewS: I agree with your comments as far as natural rankings or free search or whatever they are called are concerned. In fact, your suggestion of having a comparison page on his site, to legitimise such a reference will be one of my recommendations. I’m not sure if it gets round the trademark issue though, but I think that part of the answer may lie in the next contributor.

    Nolan: Your insights from HP are very useful. I can see the importance of accurately referring to the trademarked term and also the extent to which it is important that, in the past, the holders of the trademark attempt to defend it. The company does not appear to make liberal use of the TM symbol (How on earth do you get it on this site in a little circle?!) and it is a fact that agencies and end users alike send out their art-works to both my client and to his other competitors labelled “Artwork for S-Card” whether it’s going to S Card or has ever gone to S Card in the past. The term may well have become generic by default and unfortunately there’s probably no way to test the fact in the UK without going to court.

    You are absolutely correct about not confusing the reader about whose product he is viewing. In fact, I’ve advised him from the start never to pass-off his products as those of the competition. There’s no need to, they are better, but just in case, as a result of direct advertising, he gets a request to quote for an S Card, I’ve suggested that he corrects the impression in a simple line to state that his product is the N Card and, saying no more about the original reference goes on to point out the benefits. Note, not the benefits over the S Card – we don’t want to encourage the prospect to go to the trouble of having to look them up!

    As to the comparisons on the web page – it’s not there at the moment, but I think that as a consequence of this feedback, we should probably encourage it. His products are clearly superior on a number of counts and except when the competition are trying to force him out of business by buying orders at a loss, they appear to be more cost effective.

    The last part, the ethical bit is the most taxing. I have strong principals about morals and ethics in business and the act of building up a brand should not be scuppered by unscrupulous behaviour. However, part of the process of building a brand and acquiring market dominance involves protecting your intellectual rights and if the competition has been, for whatever reason, lax in doing that, why shouldn’t my client benefit?

    After all, I’m a salesman, and I have frequently been up against major competitors in tenders or other complex sales. If when it comes to the final negotiations, I realise that my competitor has failed to pursue a particular line of the benefit discussion or missed out on one of their major features with regard to this particular client, I’m not about to point that omission out to the buyer, am I?

    Thanks again for your inputs.

    Steve Alker
    Unimax Solutions
  • Posted by sammykarij on 9/29/2005 at 11:52 AM Member
    I remember the case of Google and Geico since in this part of the world it was highly publicized. It was held that you can bid on trademarks without any harm. So if you can make money just make while the sun shines
  • Posted by steven.alker on 10/4/2005 at 6:19 AM Author
    I’d like to thank everyone for their responses to these questions.

    Rhorowitz: The reference to Geico was very useful – my client fount the text of the court case reassuring and I think that your conclusions look to be as definitive as you’ll get in the UK without someone testing a specific case in law.

    Sammykarij: Likewise, thanks for your input regarding the same case.

    Inevitably, the issue will remain a grey area, simply because it’s a matter of interpretation of the law. Having a client wantonly breaking the law is something I don’t wish to encourage, but if in the end it comes down to how well he is capable of exploiting his position due to a laxity on the part of the holder of the trademark and considerable ambiguity in the rules Google seem to set, versus the conclusions of the US courts, then at least he is pursuing a strategy which has been thought through.

    Having sought your opinions, he’ll probably continue to sponsor the links at least until someone from the competition comes up with a solid case as to why he should stop.

    Originally I was worried about this in case it could be likened to beating someone up (which we know is wrong) and only desisting when someone points out the fact that it is immoral and illegal to do so. From our discussion here, it looks as though he’s not perpetrating a wrong in the first place.

    I’ll close the question now and my thanks again to everyone who commented both on line and off-site.

    Steve Alker
    Unimax Solutions

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