• by Wendy Davis , Gavin O'Malley , February 27, 2006

In a move apparently designed to encourage large brand marketers to increase their search marketing efforts, Yahoo, starting Wednesday, will no longer allow advertisers to bid on competitors' trademarked keywords.

Yahoo sent an e-mail to its search advertisers last week, advising them of the change, according to a company spokeswoman.

"On March 1, 2006, Yahoo! Search Marketing will modify its editorial guidelines regarding the use of keywords containing trademarks," the e-mail stated. "Yahoo! Search Marketing has determined that we will no longer allow bidding on keywords containing competitor trademarks."

Previously, Yahoo permitted competitive advertising by allowing advertisers to bid on third-party trademarks, if those advertisers offered detailed comparative information about the trademark owner's products or services in comparison to the competitive products and services that were offered or promoted on the advertiser's site.

Some search marketing executives proposed that Yahoo changed its policy in hopes of prodding big brand marketers to devote more resources to purchasing sponsored search links. Peter Hershberg, managing partner at Reprise Media, said that Yahoo can now offer marketers search buys as part of a larger online marketing effort without facing questions about whether those buys would be hijacked by rivals.

Charles Sardou, director of paid search at iCrossing, added: "Yahoo is focusing on the big branders as the future of search, and the big guys don't like to have their brands infringed upon."

Search engines also face copyright infringement challenges when companies bid on competitors' trademarks. Insurance company Geico sued Yahoo and Google over that issue. Yahoo in late 2004 settled the lawsuit, but Google took the case to trial and prevailed on the main issue.

Still, Google faces suits from other companies--including one filed in January by CNG Financial Corp.

In the meantime, Google continues to allow marketers to bid to appear when consumers query for the names of rivals, at least officially. But relatively recent changes to Google's AdWords pricing system appear to discourage companies from bidding on other companies' names.

In August, Google began rolling out a "quality score" component to its keyword pricing structure. The company now evaluates the relevance of keywords bid on to the text of ads and the landing pages; less relevant ads or destination pages receive lower quality scores, and marketers must pay a higher cost-per-click for those ads.

A Google spokesman said that the quality score was not intended to affect bidding on trademarked terms. "Quality Score is intended to increase the overall quality of ads while continuing to give advertisers control of their campaigns. We are increasing the incentive for advertisers to run on relevant terms and decreasing the incentive for advertisers to run on untargeted, or generic, terms," he said in an e-mail.