Google Search Ads Rile Its Big Customers
Google System Encrouages Trademark Infringement
As Google Inc. pushes to sell ads crucial to its revenue growth, some of its largest advertisers are growing angry with the way the company oversees its sponsored searches.
The problem is a tactic known as “piggybacking,” in which smaller advertisers use major players’ brand names, slogans or other trademarked words in the text of search ads to lure Web surfers to their own sites.
While Google and other search engines have policies against this maneuver, some marketers say the practice often goes unchecked. The brick-and-mortar world has long-established laws in this area, but the legal situation is less clear for the Internet and has only recently started to be tested in the courts.
Tensions over piggybacking have been simmering for a couple of years. Companies such as Marriott International Inc., InterContinental Hotels Group PLC, AMR Corp.’s American Airlines and Northwest AirlinesCorp. say the use of their names and slogans in the text of other companies’ search ads confuses potential customers and increases their cost of doing business. They are particularly upset with Google, which is the dominant player in the search business. It controlled 71.2% of the search market last year, according to research firm eMarketer Inc.
As a result, Google could face a backlash as it attempts to grab a bigger share of other advertising niches, including display advertising and video ads. Big advertisers say they may punish Google if they aren’t satisfied with the way the piggybacking dispute is dealt with. “This does play into our decision of overall spending — it has to,” says Michael Menis, vice president of global marketing services at InterContinental.
Adds John Gustafson, director of distribution and Internet strategy at Northwest Airlines: “If Google has an inability to help us resolve issues about abuses of our brand, that would impact our decision to participate in future forms of advertising.”
Last August, American Airlines filed a suit against Google in federal court in
Google says it is disappointed that the court denied its motion to dismiss the lawsuit. It believes the suit lacks merit. “Google’s trademark policy strikes a proper balance between trademark owners’ interests and consumer choice and has been validated by prior court decisions,” a Google spokeswoman says.
Google acknowledges that piggybacking occurs and says that when it gets complaints, it investigates the claims and tries to stop the practice. “We have a long-running policy where we don’t allow advertisers to use trademarked terms in ad text to avoid creating any user confusion,” says Richard Holden, a product-management director at Google.
The other main players in the search-advertising market are Yahoo Inc. and Microsoft Corp. Both say they have policies similar to Google’s.
The way search-engine advertising works, marketers bid on key words in a continuous auction. InterContinental, for example, bids on millions of key words a day from Google in 11 different languages. Among them are its own brand names, such as “Holiday Inn Express” and “Crowne Plaza Los Angeles.” When a consumer searches for any of the words, the company’s ad appears above or next to the results, depending on the amount the company bids and an algorithm Google uses to determine an ad’s relevance to a search.
Companies only pay Google for the key words if someone clicks on their search ad.
For large companies, the frustration comes when their names and other well-known phrases are used in the text of a search ad leading to an unrelated site. A recent Google search using the words “Marriott Atlanta,” for instance, brought up an advertiser-paid link labeled “Marriott Atlanta.” That led to www.hoteltravel.com, a discount hotel-reservations site. But a link on the site for a Marriott hotel room in
Hoteltravel.com didn’t respond to requests for a comment. The link on Google has since disappeared.
The piggybacking that Marriott, American and others are complaining about is not to be confused with another practice known as “conquest buys,” in which marketers buy a competitor’s term so that an ad for their own product appears when a consumer searches for the other brand. The difference is, the text of the ad doesn’t contain the competitors’ name or slogan. While companies have also protested this practice, Google’s policies allow it, unlike piggybacking.
Piggybacking is a big problem for marketers that do a significant amount of business online, experts say. If it is allowed to continue, companies seeking online visitors will be forced to pay more to advertise in search engines because rising demand will force up the cost of key words, says Eric Clemons, a professor at the
The companies interviewed for this article say they aren’t able to put a dollar amount on their claims of lost business as a result of the piggybacking. But concerns like InterContinental, which spends more than half of its online marketing budget on search ads, say they depend on these ads to generate sales. “Any research will tell you search is the place where people research travel,” Mr. Menis says.
A recent Google search with the words “Holiday Inn Orlando” brought up a sponsored link labeled “Holiday Inn Orlando.” It led to LowFares.com, an online travel comparison-shopping site. InterContinental Hotels, which owns Holiday Inn, says LowFares.com is not authorized to advertise using the Holiday Inn name.
LowFares.com says it bids on millions of search terms at any given time and often uses Google’s automatic system to generate its advertising copy. “What we rely on Google to do is to essentially stay within its own policies so that if a given key word or a search term that we are bidding on should not show up in the search ad, it doesn’t,” says Steve Yi, senior vice president of Oversee Marketing Services, which owns LowFares.com. LowFares.com says if it is notified of a violation, it immediately takes down the ad.
Some advertisers are demanding that Google and other search engines create an automatic system that will only allow advertisers to use other companies’ names and slogans in the text of search ads if they have permission.
But Google says its system works. “We are trying to balance advertisers and trademark owners and user interests,” Mr. Holden says.
