In May 2008 Google AdWords lifted its ban on competitor brand term bidding. Since then it has been possible to bid on competitor brand terms without having adverts disapproved. The exact legalities of bidding on competitors brand terms has always been a grey area, but one that Google does not “police”.

Since 2008 Interflora has been in dispute with M&S for bidding on the brand term “Interflora”. The case was initially heard in the UK, but due to its complexity was handed over to The Court of Justice of the European Union.  Only in September this year was a ruling given.

The full ruling can be found here, but the overall take away from it was: yes, it is legal to bid on competitor brand terms. However you have to be very careful about how you go about it.

With this in mind, here are my top tips for bidding on competitor brand terms:

1. Make sure the ads don’t cause reputational damage to the trademark owner, i.e “competitor x tests products on animals!”

2. Your ads must not look like they are impersonating the trademark owner. If it is difficult or confusing for a searcher to differentiate between your ads and the trademark owner’s, you will get in serious trouble

3. Label your ads clearly with your brand name, and highlight the USPs of choosing your product/service over the trademark owner’s

4. Don’t mention the trademark owner in the ads at all, i.e our prices are better than trademark x

5. Consider whether there are sufficient gains to be made from bidding on a competitor’s brand term
a.  Are they currently bidding on your brand term?
b. If they begin to bid on your brand term will this be detrimental for your sales/revenue
c. Do they offer an identical product/service to you?

Looking at point 4, The PPC industry is torn on whether there is value in bidding on competitor brand terms.  You only need look at the comments at the bottom of the e-consultancy summary post on the Interflora vs. M&S ruling.

Many PPC professionals would like brand bidding to be made illegal to ensure maximum clicks to the relevant trademark owner, and lower cost per clicks on brand terms as the trademark owner would not have to “bid against” their competitor.

However, in my experience unless the competitor’s advert is promoting a huge offer, only a small percentage of brand traffic is “lost” to competitors. Furthermore we have found that it gives smaller companies an opportunity to “piggy back” on larger advertisers who may generate a high amount of brand searches after a large TV campaign, for example.This “piggy back” strategy works much better when visitors have no or little prior brand loyalty.

Bidding on competitor brand terms will not work for all companies and industries, and should be closely tested and analysed. However, in the right situation we have had great performance from competitor terms. In some cases competitor search terms have had higher conversion rates than the (overall) average campaign conversion rate.

Ultimately until the final ruling on the Interflora vs. M&S case, bidding on brand terms will continue to sit within the “grey area” of best practise PPC. However, as long as you are sensible with the advert messaging, and continue the strategy only if it makes a good business case; it can be a great additional revenue stream for your business.