Tesco take AdWords stand
Tesco, the UK’s largest supermarket chain, has announced it will not engage in bidding on keyword trademarks owned by its rivals.
In taking a moral high-ground, Tesco hopes that others in the industry will follow suit and keep PPC costs down.
Google controversially relaxed the rules of its AdWords service recently to allow the practice of bidding on rivals’ trademarks from 5th May 2008; a move which is likely to swell the search giant’s profit but has many trademark holders in uproar.
When the changes to AdWord’s trademark bidding come into effect, companies will be able to have their adverts appear alongside organic searches for competitors brand names.
For example, this could lead to a search for the brand name “Tesco” returning PPC adverts for all of its major competitors - potentially diverting business that was probably heading Tesco’s way.
In the face of this increased competition for its own brand, customers could be forced to engage in paid listings of its own brand name to minimise losses - great for Google, but an unwelcome expense for trademark holders.
Customers being diverted
Although seemingly a minor irritation, the effect of rival’s bidding on a trademark can be significant. Research firm Hitwise report that in the UK 91.8% of brand searches result in the user arriving at the brand owner’s website. In the United States, where the practice of rival bidding on each others’ trademarks already exists, only 84.2% of users reach the brand holder’s site.
In addition to taking the “moral high-ground”, Tesco will hope its decision not to engage in rival trademark bidding will prevent its £2.2 million annual online advertising spend spiralling out of control.
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