Smart marketing or bait & switch? Competitors' brands as keywords in online advertising

The business models of major Internet search engines depend on online advertising, primarily in the form of search engine keyword advertising. In recent years, a controversy surrounding keyword advertising has gained notoriety worldwide, in both the international court systems and the media. It concerns a form of potential "bait and switch" advertising where a consumer, searching using the brand name of one company, is presented with an advertisement by a competitor of the searched-for brand. Sometimes, this competitor's ad copy contains the name of the searched for brand as well. This practice has been referred to as "piggybacking". Given the particular need for consumer trust in ecommerce, one might question the overall value of piggybacking. In the U.S. in particular, the legality of this practice, and the potential liability of the search engines for contributing to trademark infringement, is unclear. However, the eventual resolutions of the issue by the U.S. and international courts could significantly and negatively impact the business model of Internet search engines. In this paper, the actual prevalence of piggybacking of major brands in U.S. search engines is investigated. One hundred search queries consisting solely of one of the 100 top global brand names were submitted to three major search engines, Google, Yahoo!, and Microsoft's. Analysis of 8,345 results from the search engine results pages showed only 4 percent of sponsored ads triggered by competitors' trademarked terms. There was even lower use of trademark terms in ads by competitors. Thus, competitive piggybacking does not appear to be a widespread phenomenon. Possible explanations for this are discussed, and suggestions for future research are given.