Bidding on Competitor Trademarks is Bad Business

Vern must be new to the search game, as he clearly is unaware of what he is talking about. The reason why advertisers do it is because it often generates a high quality ROI. OneUpWeb should know from its own data, they did it quite aggressively on the SunRocket campaign they managed when targeting the term "Vonage" and making it work very effectively. When consumers are interest in comparing services and prices, such in the case of Sun Rocket, it actually works very effectively.

So, should Southwest bid on American Airlines? The answer is an emphatic yes when it comes to marketing that returns an ROI. Given they don't partake in Expedia, Travelocity, and Orbitz, this is an effective strategy to get people comparing prices for their flights.

The term "competitor" can mean different things in different industries; for example, a Honda dealership may have a huge selection of used Toyatas. In other industries, the user may be searching for a solution and isn't necessarily loyal to a particular brand, but that is the one they are most aware of; for example, searching for email solutions like Constant Contact - competitors bidding on that term may be able to lure a curious customer with special offers or features in their ad copy. They wouldn't be able to reach the searcher through organic search.

I disagree... I work in an industry where competitors bid on my brand term ALL THE TIME. And I bid on theirs as well. And things convert very well for us, bidding on competitive terms. For some industries, sure, it can be a waste of money... But not all.

Well said. I'm assuming you described a campaign with direct response as the objective. However, if the campaign objective is Brand Awareness, then it certainly could be justified in bidding on your competitors name.

Primarily, people either search for 'American Airlines' because they know they want to purchase a ticket from AA, or they are researching ticket prices (more often).

That would mean visibility (an ad) actually IS extremely important so those who are researching are either reminded to check the prices on Southwest at a later time, or to click & check at that time.

Anytime a company's direct audience is in the research or purchasing stage, that company needs to be where those vital decisions are being made -- especially online.

It only costs the company $$ when the ad is clicked. So, even if a click does not occur, the branding progress continues at no cost (overhead not included).

I hate to pile on, but I'm afraid I have to disagree as well. I routinely include competitor names in SEM programs for clients, generally with very good results. For one client that has a lower-cost offering than the industry leader, conversion rates are as high as 33% for some specific competitive brand/model phrases. They key is in the ad copy -- give searchers a reason to click on your ad instead of the company they searched on.

http://www.trademarkbidwatch.com will monitor and send email alerts when someone bids on trademarks.

what does one up know?

Bidding on competitors' brand names can be an effective PPC tactic, provided you do it ethically (follow the SE rules and don't try deceive consumers). Personally, I think bidding on your own brand terms is only necessary when competitors are bidding for them (so consumers don't have to skip 3 paid ads to get to your #1 organic result, assuming you rank first there). Even so, I am firmly convinced that PPC managers are such staunch advocates of bidding on your own brand names because it makes your paid ROI look so much better. Essentially, they are claiming conversions that would have happened through the organic listing anyway, and attributing it to the paid campaigns, lowering the overall CPA. Unfortunately this does not result in any incremental conversions...

Vern, you are giving bad advice. If it wasn't working advertisers would have stopped doing it by now.

Appearing when on competitive search terms is to me like going grocery shopping. Coke is next to Pepsi, and it is up to the consumer to decide. For DR, this strategy works just as well, if not better than, branding campaigns.

I've seen competitor trademark bidding work very well...very often.

I'll contribute to the disagreement thread, as I've found the exact opposite to be true time and time again. Bidding on competitor's brand names, in my experience with clients, generates a higher CTR, conversion rate, and ROI than generic keywords.

Wow - It's great to see so many of you weigh-in on this topic! Of course each client's unique needs should be considered. If bidding on competitor names delivers for you, more power to you.

I struggle with the issue because it's inherently tacky to bid on a competitor's name, and can make it hard for you in the future to go after a competitor bidding on your name because of that precedence. But different cases apply, and the fact is, few Xmas bonuses are awarded for classiness. Sometimes you do it as quid pro quo, to open up the door to a negotiated truce. If you're not the brand leader, or its price-sensitive, offering customers they an alternate option can work. If you don't target it properly, the CTR will be so low that you will drag down the quality over your whole campaign. Recently removing all the competitive searches on a client lowered their CPC by 60% - which is a lot of more clicks for the budget. As always, exhaust the budget on the best ROI terms, then move to the next terms. Plus there is often a pool of keywords where people are actually looking for the brand name alternative. If you haven't looked at this angle, there can often be a lot of searches like this - especially in a recession.

Bidding on your brand name again is a case-case story; Competitive blocking, share-of-mind (reference the Enquirio/Honda/Google case study on this), more real estate on the brand. But David is absolutely correct about SEM's hiding results behind high-converting brand searches. Any good SEM/SEO should be separating results by BRANDED results and NON-BRANDED results.

This tactic completely depends on the industry. Even using the example in the article about the airline, what if someone was looking for a more specific airline that services Central America. Now a competitor of that airline that also services the same area wants people to know about it. If their ad is compelling, it can be very effective. I am sure arguments can be made both ways. The best solution is to track you Cost Per Lead on various campaigns and see how the competitor campaign actually performs. You might be surprised.