In running Paid Search campaigns for our clients a frequent question we receive is whether a) they can bid on their competitors brand terms and b) whether they should.

Back in June 09, Google announced a major change to its trademark policy which meant that keywords (in a search query) could not be protected by a trademark.  This effectively allowed competitors to begin bidding on previously trademarked keywords without causing an investigation by Google (and subsequently being removed).

Whilst you can now bid on trademarked terms you are still not allowed to use trademarked terms in advert copy unless you have authorisation from the trademark owner.

So, yes it is not “illegal” to bid on your competitor’s terms.  Your ads will not be taken down by Google as long as your adverts are clearly marketing your own business and not impersonating the brand you are bidding on.

Now, let’s analyse the “should”…

As I always tell my clients, the choice of bidding on your competitors brand terms depends on the goals and strategy of your business.  Yes, bidding on competitors brand terms will increase your brand visibility and drive quality leads that may not have found you previously, but I would ask you to consider the possible negative effects:

1. As you would be bidding on another company’s brand term, your website would have a very low relevancy to that search query.  Google would therefore penalise you with a low quality score, meaning that your first page minimum bids would be very high.  This would not be cheap traffic, and will negatively affect the quality score of your overall campaign.

2. If you begin bidding on a competitors brand term, it would be a natural reaction for them to start bidding on your brand term.  You need to think about the potential reduction in visitors and conversions this may have where you are listed in the natural listings for your brand term.

3. If competitors begin to bid on your brand term you will need to (if you have not already) start bidding on your own brand term to ensure that you are protecting your brand, and losing as little traffic as possible to your competitors advert.  This may mean that additional budget would need to be allocated to paid search.

If your business can a) stomach the high/increased costs and b) take a hit on your natural traffic, then bidding on your competitor’s terms may be highly effective for you.

Whatever your paid search strategy, I would always recommend testing each and every element of it.  Therefore if you choose to begin bidding on your competitors brand terms I would recommend that you test it for a month and then analyse performance.

Key points to remember are:

1. Don’t be disconcerted by small traffic volumes from competitors brand terms.  The traffic volumes are not going to be incredibly high (and the bounce rates most probably quite high) because people are looking for a specific brand/company and not necessarily wanting to be distracted by another company.

2. TURN OFF KEYWORD INSERTION for any ad groups that contain competitors brand terms.  If you use keyword insertion in your ad titles, the competitor’s term will come up in your advert which can get you in trouble for impersonating the brand and/or trying to falsely lead traffic to your site on the assumption you are another company.  Google sees this as both a poor user experience and an infringement on trademark laws.  This is very important – don’t overlook this otherwise you will have their lawyers on the phone!

So, as you can see there is no definitive yes or no answer to whether bidding on competitors brand terms is a good or bad thing.  However, think about the points above and if you choose to begin bidding on competitors terms TEST the results and then analyse the data.

If you have any questions, please leave me a comment below or pop me a direct message on twitter