Today's essay question:
What are the infinitely huge ramifications of a Google/Yahoo/MSN disallowing anyone who tries to bid on a trademarked term other than the registered owner? Obviously bid prices would drop substantially, but what are some of the other consequences that may not be readily apparent? Do you support the free market system in the online advertising arena?
The entire Internet is based on the free market. That's what allows Internet businesses to succeed or fail so quickly. "Ready, shoot, aim." Our legal system has developed a process for dealing with trademark violations that includes recourse to the courts. Slow and expensive. And even there, the use of a competitor's trademark for comparison is okay.
So why would we introduce all that slowness and expensiveness into a great system?
The idea comes from selfishness and shortsightedness. Large companies see small companies showing up on searches for their trademarks. Consider the viewpoint of a trademark-owning behemoth:
- They've paid millions in offline branding to build that trademark
- When people search for that trademark, small competitors show up
- To beat them, the owner has to outbid them
- Even then, that only bumps the little guy down a slot
So a policy change prohibiting those little guys from bidding at all not only saves the behemoth money but totally removes the little guy from the listings. Perfect ending!
...or is it?
A consumer searching for a trademark is obviously already 'aware' of the product (in the classic AIDA model). The fact that they are searching also means they are at least at the 'interest' phase -- searching for more information about the product. It's natural for the manufacturer to want to be the only source of information. But consumers have come to expect seeing both sides of the situation. And they're going to, one way or another. Even if there were no PPC ads, there would still be natural search results!
The other case is a consumer searching for a trademark because he's actually at the 'action' phase. He's looking to buy your specific product. A competing ad, of the sort that some people want to remove, would either be for a competing product or simply another reseller of the same product (slightly discounted, with a commission due to the reseller).
If the problem is resellers competing, the company needs to reevaluate how it compensates resellers and whether its strategy makes sense. The answer is internal, though, and shouldn't be addressed by forcing external changes to the search engines.
If the problem is competing products that are so compelling they can peel buyers away when they're in the very act of purchasing your products, you need to reevaluate your competitive position. Again, the answer is internal. Trying to force external changes on the search engines is a crude, ham fisted approach to solving business problems.
So, that's the 'principled' approach to an answer.
Practically speaking, the policy would be as tough to implement as Google's only partially successful 'no attack ads' rule. Proctor and Gamble owns "Tide" as a trademark. A strict implementation of the no-competition policy would preclude other soap manufacturers from bidding on 'tide' and talking about how they are better. But it would also prevent me from bidding on the word 'tide' to promote my new movie, "Tide of the Titans." And what about the radio manufacturer who sells maritime radios with live tide and surf condition reports?
How would Google decide where to draw the line? Manual review of each account that would require arbiters to actually visit each site? That's what Google hates. ("That's what Bilbo Baggins hates.")
So, the suggestion that trademark owners be allowed to prevent anyone else from bidding on 'their' keywords is unprincipled and impractical.
That's what I think, anyway. Once I'm a major trademark holder, I'll probably feel differently about it. But that's only because I'll be fat and lazy, reclining on my hammock in the Caribbean.
Mmm... hammock...