Two weeks ago, we spoke about the merits of bidding on your own company brand name. One of them was to prevent competitors to steal away your potential customers.

From Google’s perspectives, it is fine to bid on your competitors brand name and products. In May 2009, they made it possible for your competitors to bid on your company name and use your brand terms in their text ads. In September 2010, Google expanded this practice to Canada, U.K. and Ireland. The same day, they also made it possible for most advertisers worldwide to bid on your company name (but not include their brand terms in the text ads). This is currently being challenged  by the European parliament and US companies like Rosetta Stone.

There are some limitations, which Google highlighted below:

”Ads using the term in a competitive, critical, or negative way will not be allowed to run with the term at issue in their ad. Additionally, we will not allow the following:

- ads that do not lead to a landing page that clearly facilitates the sale of either the goods and services corresponding to the trademark or parts or components related to the goods and services corresponding to the trademark

- competitive or critical information about the goods and services corresponding to a trademark

- ads that do not lead to a landing page which provides substantive information about the goods and services corresponding to a trademark”

The above rules are of course controversial for market leaders like Rosetta Stone that have established generic brand names that are associated with a category wide product. Google would argue that customers looking for Rosetta Stone products are looking for a language training program, not necessarily Rosetta Stone’s.

Google trademark policy is also not drawing clear boundaries. Right now, it seems any company can bid on any competitors’ name.

Stealing our customers away

In my experience, Google’s argument that their trademark policy is an attempt to increase customer experience is biased. There is clearly some financial benefits in having competitors and resellers bid on the same terms. Due to the nature of the AdWords auction, more bidders will automatically drive Cost Per Click (CPC) up.

Don’t get me wrong, I have seen instances where bidding on your competitors brand name or products work. This is especially true when your competitors is not using any paid search advertising. But unless your competitors are not running any analytics, they will notice the drop in traffic and sales. And very quickly will start creating ads that not only aim to recoup loss traffic but also take your own customers away.

Only Google is the long term winner of those short sighted strategies for advertisers.