What is Trademark Bidding? & Why Does It Matter to Brands

Written by sam.engel | Feb 15, 2021

If you’ve ever searched for your own brand online, you’ve probably already encountered trademark bidding in some form. Trademark bidding—also known as “brand bidding”—is simply the act of targeting paid search advertisements to branded keywords (searches that include a brand name, or some variation).

To use the BrandVerity branded search query as an example, here’s an ad that we choose to place on searches for “brand verity” on Google:

Like us, many brands choose to bid on their own branded keywords. There are two schools of thought on the subject, with reasons for why you should bid on branded keywords and why you shouldn’t. In our experience, brands typically choose to bid on their own branded keywords. There are many good reasons, but some of the most common are:

Clicks are inexpensive—Because your own ads are highly relevant to searches for your brand, the cost-per-click on branded keywords is generally low (around 10 cents or less).
Blocking out competitors—By occupying paid results with your own ads, you can prevent competitors from trying to divert your customers away.
Control over messaging—Unlike organic results that take time for the search engines to update, paid search makes it easy to adjust high level messaging on the fly. This is particularly useful if you want to align paid search with any brand messaging such as the tagline from your latest TV campaign.

Who Else Can Bid on My Trademark?

If you do choose to bid on your own brand, you may find that you’re not alone in doing so. Because branded keywords demonstrate purchase intent and convert well, other advertisers are often tempted to bid on them too. This means that you can end up having to compete for clicks with marketing partners, affiliates, and even third-parties such as search arbitragers.

These competing advertisers have several effects:

Decreased CTR (clickthrough rate) for your ads—When there’s more competition out there, it’s harder for your own ads to stand out. That means a reduction in the traffic that comes to your site—and a reduction in revenue. Even a seemingly small drop can mean a lot when your brand receives a high volume of monthly searches.
Increased CPC (cost-per-click) for your ads—Increased competition also means that you’ll have to pay more for each of the clicks you do receive. Because paid search prices are set through an automated auction, more advertisers mean more bidders to hike up the price.
Poor Customer Experience—In many cases, the messaging in other ads can confuse your customers. For example, ads from marketing partners or affiliates may use different language to describe your products or services. What’s worse, they may promise excessive discounts, promote inaccurate offers, or even make misleading claims that cause regulatory or other risks. In some cases, advertisers such as search arbitragers can simply distract customers from their path to purchase, creating additional friction for your marketing efforts.

Even if you don’t bid on your branded keywords, trademark bidders can reduce your organic traffic. Their ads will simply appear above or next to your organic listing in search results, skimming away a portion of the clicks—and potential revenue. Plus, your customers can still be subject to the poor customer experiences listed above.

What Types of Advertisers Engage in Trademark Bidding?

Depending on your industry and business setup, there are a variety of potential trademark bidders you might encounter. For example, hotel brands tend to find online travel agencies (OTAs) bidding on their brand terms. Electronics brands often have resellers of their products (retailers) show up. Here are some of the common types of advertisers that we see:

Affiliates
Lead Generators
Channel Partners (Resellers, Retailers, Wholesalers, Dealers, OTAs, etc.)
Comparison Shopping Engines (CSEs)
Franchisees
Competitors
Search Arbitragers

Depending on the type of advertiser, brands may want to restrict trademark bidding. Those restrictions can range from a complete ban on targeting any branded keywords to specific instructions on permitted keywords, geographies, ad copy, and even ad position.

How Do I Set the Right Rules for Brand Bidding?

Before trying to write restrictions, we recommend getting a sense of how much trademark bidding your brand experiences—and who is behind it. The best way to collect this information is to monitor the situation closely. You can get a good idea of what’s going on by looking in a few places for evidence. In our next post, we’ll discuss what those places are and how to examine them.

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