Google recently announced it would allow limited use of trademarks in the text of some search ads in the US, even if the trademark owner objects.
While previously brand owners could specify which retailers or affiliates were able to reference their trademarked brand name, any advertiser who sells a brand on its website can nowuse that brand name in the text of their Google ads.
Google’s Trademark policy change in the US is likely to impact a wide range of advertisers, brand owners, competitors, and affiliates. However, it is the brand owners who should be particularly vigilant of the new ramifications.
Under the old rules, in order to use a restricted brand in a creative (one for which a brand owner had notified Google), that affiliate had to be white-listed by the brand owner. For example, Nike had to notify Google that shoes.com was an authorised affiliate. With this change, if shoes.com uses Nike terms on its website in a commercial context, the brand term is allowed in the creative. This white-listing process is now obsolete.
Brand owners now need to be aware that affiliates, who were previously not white-listed but sold using brand terms on their landing pages, may now start to influence the brand in their creatives.
This will increase their quality score and the value of the ads, driving competition in the auction, resulting in potentially lowered traffic and increased cost for brand owners.
We urge brand owners to diligently police the use of their trademarks on external websites and have been advising our clients to revisit their affiliate program T&Cs to ensure that brand term usage rules in ad text or keyword selection protects the brand owner from undue competition.
Even if the brand is protected, sites using it in an oblique way, such as textbooks for an online university, may have an opportunity to take advantage of a brand name in their creatives that they didn’t have before.
Action will need to be taken here, yet Google’s enforcement plans are still unclear and more time is needed to observe the effects. However, Google has confirmed that the use of the brand must be in a commercial context so commentary sites (for example, NikeBad.com) would not be able to benefit from this. Google will also investigate abuse at the request of a brand owner.
Some advertising categories have already been “consolidated” by Google, meaning that even if there are many advertisers for a single offering, only one ad will be shown. This is common practice in categories with heavy affiliate marketer participation and this type of consolidation will remain in force. Typically, the brand owner‘s ad is the one shown in these situations (function of quality/control and bid), meaning these consolidations protect brand owner traffic, although the price paid is likely to still be high in some situations.
What are the implications of this change?
Using brand terms in targeting, i.e. the keywords themselves, has been widely available to affiliates and authorised resellers for a long time – but, until now, they have not been able to use trademarked brand names in the ad text, even though when this is the case visitors are more likely to click.
Ads with brand names in the text cost less than those with brand keywords in the headline, and receive more traffic than text with no brand names in it at all. This means affiliates and authorised resellers in the US can now compete more effectively with the brand owner’s own ads.
Whilst the UK is a totally independent and separate market, the changes in the US are an opportunity for observation and learning as it will be interesting to see how brands and advertisers adjust.