One aspect of paid search marketing every online business has to grapple with is what’s known as trademark bidding. Trademark bidding occurs when one company bids on the name of a competitor or its trademarked terms so that its own ads show up alongside the competitor’s.
To use a Tax Day-appropriate example, consider the search term [TurboTax]. A searcher who types that term into Google will be served ads for H&R Block right below the TurboTax ads. What’s happening is that H&R is bidding on TurboTax as a keyword. The opposite happens when someone Googles [H&R Block]. Turbo’s ads show up right below H&R’s.
TurboTax and H&R Block are major rivals in the middle of an acrimonious and highly publicized advertising battle, so it makes sense that this would be the case. But sometimes small companies will bid on a larger competitor’s trademarked terms to try to steal away some business. For a more parasitic example, a user searching for [LegalZoom] would get served an ad for Legal Center Pros.
While it’s not illegal, there are some marketers out there who consider trademark bidding ethically questionable. Google and Bing allow it (though it was previously banned on Yahoo), provided that the company doing it does not use the trademarked terms in its ad copy.
The upside of trademark bidding is that it can sway consumers on the fence, or expose a brand to potential customers who don’t realize that it’s an option. This can be especially effective if the brand runs a special offer on a specific product that is very similar to the trademarked product of a competitor.
The downside of trademark bidding is that most people do not search with trademarked terms. And those that do have usually already made up their minds about purchasing from that particular brand, or are at least trying to find more information about it specifically.
Also keyword phrases in trademark bidding tend to have lower quality scores. In PPC a quality score is Google’s estimate of how relevant ads, keywords, and landing pages are to the searcher. A high score means that Google thinks a company’s ads are relevant and useful.
A high quality score is more than just a gold star from Google. It can mean easier and cheaper entry into the ad auction for certain keywords, lower CPCs (cost-per-click), and lower first page bid estimates.
Conversely, when keywords tend to have lower quality scores they have low click-through rates and low ad/landing page relevance. Not to mention the fact that when an ad is not very relevant to a searcher, it usually fails to produce conversions. This is what tends to happen in trademark bidding.
In short, this can mean higher costs per conversion, which often make trademark bidding less economical than bidding on keywords that aren’t trademarked by a competitor.
In certain circumstances, of course, trademark bidding could prove a valuable part of a company’s PPC arsenal. But the complexities surrounding this single PPC issue drive home how important it is to make sure every paid campaign is well groomed. Left unmanaged, costs can easily spiral out of control.