Some businesses choose to advertise on competitor names while others don’t. Is it worth it & what is the risk?
Google allows AdWords customers to advertise on trademarked terms in the U.S. & research indicates that U.S. courts have so far agreed that it is not illegal to advertise on competitor names, as long as the message is not misleading. However, the rapid adoption of the Internet as a tool to find products and services has resulted in trademark law getting challenged and changed on a regular basis, so there is still uncertainty in this area.
I would like to start out by making it very clear that I am not a lawyer. However, per Jeffrey A. Babener, who is an attorney with Babener & Associates, “Generally, a seller or imitator may use a competitor’s trademark when advertising the seller’s product so long as the competitor’s trademark is used in a truthful way, such that its use is not likely to create confusion in the consumers’ mind as to the source of the product being sold”
“Over the years, many different legal theories have been used by competitors in an attempt to stop the use of their name or product … Actions have been brought for disparagement, trade libel, defamation, trademark infringement, unfair competition and misappropriation of a name. The successful cases have, for the most part, involved false advertising and unfair competition through the misrepresentation of one’s product, causing consumer confusion… A seller may be held liable for unfair competition under federal and state laws where the seller misrepresents either the seller’s, or the competitor’s products. ”
Some U.S. courts have upheld that advertising on a competitor’s name is legal. For example, In J.G. Wentworth SSC Ltd v. Settlement Funding LLC, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007), the court granted summary judgment to the advertisers based on the lack of evidence of consumer confusion. There are other examples as well.
Businesses can partially protect themselves by trademarking their name so competitors cannot use their name in ad copy, but again, this process does not prevent competitors from using trademarked terms to advertise on. Advertisers can click here to review AdWords Trademark policy detail and access their Trademark Complaint Form.
Interestingly, when it comes to advertising on a competitor name, large companies basically have the ability to bully smaller companies into submission, and here is why. If Business A is upset about Business B’s decision to advertise on Business A’s name, Business A can then have their lawyers issue Business B a Cease & Desist Letter. If Business B decides not to listen, they may then be setting themselves up for potential litigation. I am trying to simplify something rather complex, but the bottom line is that even if Business B has done nothing illegal, they may still find themselves in a position where they have to defend themselves. The cruel reality of litigation is that it can easily cost $100,000 in legal fees. Furthermore, a company cannot defend itself as an individual can, so a lawyer must be hired to defend a business (with certain exceptions that might apply to small claims court). Again, I am not a lawyer, but this is my understanding.
In the end, it appears that advertising on competitor names is legal and usually OK to do. If a competitor is upset, they will usually have their lawyers provide a Cease & Desist Letter, at which time you may want to comply with their request as litigation is incredibly costly. It must be understood that advertising on competitor names has the potential to result in unforeseen grief, litigation & legal fees, so it is important to understand your risk.
At JumpFly, we leave the choice of advertising on competitor names to the client. For those that have done this, it has often proven valuable and provided a very favorable ROI. However, this action can certainly lead to grief if a competitor is infuriated and willing to try and litigate, even if they would likely lose. So if you choose to go down this path, it must be done carefully & without confusing potential customers. Sadly, businesses advertising on competitor names that find themselves in litigation will likely find that even a victory in court still results in defeat in the pocket book.
Welcome to 2009! It’s back to life, back to reality for pay-per-click (PPC) advertising after the holidays. First things first, turn off those Christmas ads – I’ve still been seeing a lot of “Free Shipping in Time for Christmas” and “Start Planning for 2009 Today” ads out there.
Have you looked at your PPC ad copy lately? Now is the time to take a look at your ad copy and make changes. If you have multiple ads running, is there a clear loser that you can pause? Is one of them performing really well? Can you test a variation of it to see if you can beat it, or use it in other AdGroups to improve performance elsewhere? If you are planning a Winter Sale, go ahead and do new ads to highlight it.
One thing I really wish the search engines had was start and end dates for ad copy. It would be wonderful to know a client was going to start a sale on a certain date, create the ad to start running on that date (instead of creating it and pausing it, then going in to make it live when the sale starts) and then having it end when the sale ends (instead of manually having to remember to pause the ads). In fact, Google is usually so far ahead of the curve on things like this, that I’m amazed they don’t have that feature already.
But until the search engines add this functionality, you’ll just have to remember to end your holiday ads and start and end your sale ads.
Another thing to check is your PPC advertising budget. Did you raise it for the holidays? Do you need to bring it back down to a lower level? That’s another thing you can look at. Did you do a new marketing budget for 2009? Now is the time to make changes to your PPC budget to be in line with your overall marketing strategy.
I wish you much success in your PPC marketing in 2009. If you are managing your own PPC accounts and spending over $1,000 per month, you should definitely consider starting the new year with a free PPC account review from a qualified PPC management agency. Many advertisers needlessly and unknowingly waste a large portion of their budgets by improperly using the constantly changing PPC platforms. Don’t be one of them.
Google recently published a Retail Holiday Study that we found very interesting here at JumpFly. Granted it was conducted in September, and some answers might be different now, but there were some key findings I wanted to share.
1. Researching Starts Early: 31% of consumers planned to start shopping before Halloween, and 57% are researching right now, before Thanksgiving.
2. Research is Increased Due to Economy: 43% of consumers say they plan to spend more time this year shopping and researching gifts because of the state of the economy.
3. Online Research is King:54% of people go online to research than go to the store to buy, 49% research online and purchase online and another 28% research online, go to the store to check out the products and then go back online to actually buy the products.
4. The Internet is Key Influencer of Holiday Purchases: 86% of users will use the Internet to plan their holiday shopping and 63% of users plan on paying attention to advertising while planning or doing holiday shopping.
5. Post Holiday Sales Are Important: 63% of consumers say they plan on taking advantage of holiday sales.
A few other key nuggets of information, online shopping will gear up right on Cyber Monday, which is the first Monday after Thanksgiving, or December 1st for 2008. It continues to climb until right before Christmas.
And what are consumers looking for when they are online? 86% of users are looking for and plan on taking advantage of price discounts and sales, while another 75% of consumers are looking to taking advantage of free shipping. What does that mean for you? Unless you are the only player in your market, you better be offering some kind of special like a discount or free shipping or you are going to miss out on customers, plain and simple. Now is a great time to adjust your pay-per-click (PPC) advertising ad copy to reflect any available incentives.
The holidays are coming, so be ready. Plan now because waiting even a bit longer will be too late.