One of the more contentious issues in the search marketing universe is the practice of bidding on the trademarked keywords of a competitor. While the issue has been largely settled for now -- it is legal to bid on keywords that include a competitor's brand name, but not to use a competitor's trademark in the ad copy -- regulators are still trying to find ways to hem in search marketing tactics.
Last week, an advisory opinion to the European Court of Justice court (the Supreme Court of E.U.) recommended the adoption of certain restrictions on the practice of bidding on competitor's trademarked keywords. Typically, the European high court adopts the recommendations of opinions issued by its advocates general.
What set off this latest round of regulatory belt-tightening was a lawsuit by the flower delivery service, Interflora, against its rival Marks & Spencer. M&S regularly bid on its rival's brand keywords to advertise its own flower delivery service. In the past, advertisers have sued Google for allowing such practices to occur, so this case is novel in that one advertiser is suing another.
It appears the opinion is narrowly written, and recommends only that advertisers may not bid on brand keywords of rivals if the ad that is served confuses the consumer and "does not enable an average Internet user, or enables the said user only with difficulty, to ascertain whether the goods or services referred to in the ad originate from the proprietor of the trademark."<
Google says the opinion is consistent with current policies and added: "We believe that user interest is best served by seeing more relevant ads, ensuring useful and informative advertising for a wide variety of different contexts. We also believe consumers are smart and are not confused when they see a variety of ads displayed in response to their search queries."
While regulations against false, misleading or malicious advertising have been in place in many jurisdictions for more than 100 years, restrictions on search marketing (a much newer form of advertising) have only started bubbling up relatively recently. While Google has been largely successful in beating back the most extreme regulatory proposals, more and more are coming onto the books. Moreover, Google, and search practice in general are coming under increased regulatory scrutiny.
There is good regulation and there is bad.
The market is mostly a good and pristine place for consumers; it's only the worst impulses of both capitalists and governments that tend to make it dangerous or perverted. Which means, ironically, that both capitalists and governments act as good checks on one another through a push-and-pull that mostly works (with notable spectacular exceptions) to keep markets fair and functional.
In the realm of search marketing, capitalist forces are at work to prevent certain forms of competitive threats by seeking limits on how advertisers bid on keywords to achieve competitive advantage. It's odd, though. Were Interflora to prevail absolutely, it would tie its own hands in the fight to gain market dominance in the delivered-flowers arena. I mean, there may be a time when it makes strategic sense to bid on Marks & Spencer's trademarks, right?
Google, Bing and Yahoo operate commercial marketplaces that largely work absent any real government regulation. While those who love to game systems and pervert otherwise functional markets are always at work plying their nefarious trades, the system most often self-corrects (thanks, in large part, to the efforts of users, bloggers and the media). Still, it makes sense that there are some government-mandated limitations for the worst of the nefarious impulses.
But I sense a growing "scope creep" that could unnecessarily curb an otherwise highly functional commercial environment. Search advertisers everywhere need to remain vigilant and insist government regulators remain hands-off to the largest degree possible.
Moreover, those search advertisers who would seek to tie their own hands to gain a short-term, largely Pyrrhic victory would be best advised to think more strategically, with a view toward their longer-term interests.