Towards the end of last year, Google decided to update its trademark policy with regards to how advertisers can bid on a third party trademarked brand name. In sum, the new guidelines make it clear that advertisers can bid on a trademarked brand name if their page provides information on or a path to complete the purchase for that brand.
To quote Google’s own announcement, “Advertisers may use a trademark term it ad text if they are a reseller of, offer compatible components or parts for, or provide information about the goods and services related to the trademarked term.”
If Google’s intent was to clarify any type of potential trademark dispute, the reality is that now it is even more difficult to understand who ‘owns’ the final product. This is especially evident when it comes to hotels, OTAs and metasearch engines. Per the new trademark policy, both OTAs and metasearch engines will be able to use hotel’s trademarks as part of their competitive bids on Google’s search network.
Again, per Google’s new policy, as long as “the product or services” is “clearly available for purchase from the ad’s landing page” any of these resellers can now use any trademarked name freely. Yes, this means any existing hotel name. And of course, this use is not limited to resellers, but also allows other third party websites, blogs, online magazines, etc. to do the same.
According to MarkMonitor, a company that specializes in protecting brands in the digital world, the economic impact of “brandjacking” or the result of allowing third parties to compete with brands for the same traffic is more than $2 billion per year.
If you’re a digital marketer and have been created some type of “competitor’s ad campaigns” over the past years, you already know that using a trademarked name at the keyword level is a common practice. However, you also know that you could not legally use a competitor brand in the ad headlines, description or any visible part of the ad.
It’s too soon to tell, but based on Google’s new policy, hotel’s won’t be able to protect their own branded terms at the ad level either. The unfortunate side effect of this change is that hotels won’t be able to outbid OTAs or third party resellers when using their own branded terms. This is a clear outcome of how Google’s own auction works.
If an advertiser (hotel) Ad Rank is a factor of their Quality Score and their actual Bid amount, the hotel could most of the times obtain a higher Ad Rank (top of the results page) with a lower bid (cost) by the mere fact that, by owning their branded term, they will always get a higher Quality Score. Or at least higher than an OTA would get by not being able to use it.
But now, it seems like the only leverage that hotels had against competing OTAs and metasearch engines is gone. After all, as long as an OTA landing page for a hotel is “primarily dedicated to selling” in this case your own hotel rooms and “display commercial information about them, such as rates or prices”, they’re back in the game and taking your direct bookings away from you.
If the bidding war has already been getting expensive over the past few years, now it’s even more open as ad agencies will request increased advertising budgets from their hotel clients to keep up with the higher CPC costs for branded terms.
At MGR, we’ve already seen CPCs for branded terms and branded campaigns increase significantly lately. So much so that, when looking at Google’s Auction Insights, we’re starting to see a lot of OTAs and even Airbnb taking a significant portion of the pie and outranking our clients for their branded campaigns.
I leave you with this excerpt of Mark Okerstrom, Expedia’s President & CEO during a Lodging and Restaurant conference Q&A session last year when he was asked about the role that competition plays in their own marketing spend.
Well, it’s a real factor. It’s a real factor. You’ve got competitive options. You have got multiple layers of competition where, if you take ourselves versus Booking.com, and it’s not a war, there’s lots of room for both of us, but they’ve got KAYAK and we’ve got Trivago. We’re bidding in KAYAK versus them. They’re bidding in Trivago versus them. And then Trivago is bidding in Google versus both of us. And TripAdvisor — we’re all in TripAdvisor, they’re bidding. I mean, it’s everyone bidding against everyone. And the interesting thing I think we found is as Booking started pulling back, it’s got knock-on consequences across the whole ecosystem. And I think what we’re finding is that the strength of brands, maybe surprise, surprise, but the strength of brands in the travel industry, yes, even in the Internet, is important. And businesses coming to Expedia, Hotels.com and, yes, some of our competitor brands as well and, in many cases, they’re coming to us through more direct channels than they have in the past. And I think we’re finding that maybe some of these channels were less — are less incremental than we thought they were originally.
If you thought digital marketing is expensive and your only edge was on branded terms, that edge is now gone. You can expect the average CPC for your own branded terms to increase and you will need to raise your bids if you want to remain competitive. And sadly, no trademark documentation will prevent that from happening.
Thank you for reading. Until next time, this is Manuel Gil del Real (MGR)