Brand bidding is the practice of bidding on brand terms of a third party, in most cases a competitor. This way, your ads appear when that brand name is entered as a search term. The goal is to direct traffic away from the competitors site.
Brand bidding is part of keyword advertising and is often used in a negative context, especially when it affects brand names of a third party. For example, company X might bid on the brand name of company Y and ads for company X would then appear in the search engine whenever someone looks for company Y’s brand name. The idea is to attract and redirect visitors that were actually searching for company Y to company X’s website or landing page.
Another consequence is the increase of bids in search engine marketing. The more companies or users bid on a certain keyword, the more expensive an ad for this keyword will be. For company Y, this means bookings on their own brand name are driven up in price by their competitors because greater competition arises on chosen keywords.
In many cases, it is useful to bid on one’s own brand, especially when competitors also bid on your brand. While this drives up the price, it also results in more traffic to the platform linked to the ad. For smaller companies, this is an opportunity to tap into more traffic for certain keywords and long tail combinations. Brand bidding can be used in all usual advertising platforms such as Google AdWords or Yahoo! and Bing Network. However, some things have to be observed in order not to become liable to legal prosecution.
Company ABC wants to bid on its own brand name. AdWords ads get booked and a brand name campaign is drawn up. The keywords include brand names such as “ABC.” If the term ABC is searched in a search engine, the company’s ad will be displayed in the search results.
Company ABC would also like to show up with an [AdWords] ad when users search for its competitor XYZ. So ABC creates a campaign that uses one of its competitor’s brand names as a keyword, for example “XYZ.” Now company ABC’s ad will be displayed next to XYZ’s actual brand ad. The use of third party brand names is generally considered trademark infringement and may result in legal consequences. Therefore, it is necessary to determine exactly what the criteria are for a legitimate brand name ad.
Whether brand bidding is permitted by law depends on two factors. The European Court has in principle, not prohibited this practice. But it has set limitations, which companies need to adhere to when looking at brand bidding as an opportunity to increase traffic (and will accept the costs involved with it).
The law focuses on the consumer. He must be able to exclude an economic link between the advertising company and the companies listed under the keyword. Ultimately, however, there are individual cases which are legally disputable. Thus, bidding on brand names of particularly well-known companies may constitute a trademark infringement. Caution should also be exercised when posting ads in other countries.
Brand bidding is a commonly used technique by publishers who are registered with an affiliate program. Publishers bid on their own brand terms because purchased traffic takes time, resources and money. Traffic as such does not necessarily have a specific ROI and ensures revenue. In the case of online shops, for example, it would more likely be transaction-relevant keywords that bring revenue. Merely bidding on a brand name involves financial risks.
Additionally, there are also legal aspects and possibly resulting costs. Brand bidding is only useful if it is used in a legally legitimate way, wherein the cost for traffic is clear and a sound strategy for monetization exists. Notwithstanding, AdWords experts recommend focusing on one’s own portfolio, one’s own brand, and of course transaction-relevant keywords.