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Trademark bidding gets off to flying start

Platform: Internet | Author: Justin Pearse, Editor, NMA | Source: NMA magazine | Published: 08.05.08

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Fresh from last month's announcement of its investigation into price fixing by the UK's four big supermarkets, the Office of Fair Trading may have a new challenge on its hands. NMA has discovered that a number of gentleman's agreements not to bid on rivals' trademarks have been made to try to lessen the impact of Google's rule change on bidding in paid search advertising.

From Monday, companies were finally allowed to buy trademarked terms as keywords. A quick browse on Google...

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... the day after found plenty of evidence that many companies had adopted the new approach. A search for 'Sky', for example, brought up Virgin Media in the sponsored links, while 'Tesco' returned any number of companies offering competing loans.

Search for many car brands, however, and it's hard to find anything other than ads for approved dealers. This is one sector where there have been suggestions that some gentlemanly phone calls may have taken place.

Trademark bidding has long been allowed in the US and on Yahoo! in the UK, but its UK launch on Google has caused a flurry of outrage. Brands like Lastminute have been promising to sue. Others like Tesco have vocally stated their intentions to take a moral stance not to bid on the trademarks of their competitors.

It's unlikely Google will face a successful legal challenge. But its rule change may have a negative impact in the short term by diverting companies from using online for brand building to defensive brand protection. And in fiercely competitive sectors like financial services, trademark bidding will compound keyword price inflation and continue to be used aggressively.

What the move really demonstrates is the ultimately doomed future for any effective code of conduct in the search market, such as the IAB's effort announced in January.

What impact the trademark debate will have on the fledgling mobile paid search market remains to be seen. But as we report on page 26, with an estimated 30m searches across operator portals a month and improvements like Google launching mobile image ads, this is becoming a crucial battleground for brands.

Justin Pearse, editor, NMA justin.pearse@centaur.co.uk