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  1. #1
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    This week, Google won a ruling in a legal case brought by one of its advertisers, Geico, an automobile insurance company. Geico is not happy that links to competitors also appear when people search for information about the company. Geico called this an illegal use of its name. But a judge disagreed.

    http://www1.voanews.com/SpecialEngli...the%20Internet

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    Good!
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    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    As if the ruling would have stopped Leader!
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    I wasn't bidding on any merchant names. But, on principle, I think it should be allowed, so I applaud the ruling.

    Here's why: These places that try to make sure they're the only ones that show up for PPC searches on their names, strike me like McDonald's trying to keep Burger King from opening up next door because "the hungry people who drive on that road are looking for a McDonald's."

    But no matter what motivated the person to drive within range of the McD's--McDonald's rights end at their property line (or at the edge of their rented space). They have no right to dictate what opens next door. If a Burger King is what opens, it's tough--they have to compete!

    I think of PPC listings the same way. By bidding, the company "rented" (and therefore has rights over) one slot in the Google "building"--NOT all of them.

    So I'm all for the court's ruling. Planting a competing place smack-dab next to another one is an old bricks-n-mortar standby, and there's no reason not to have an online equivalent!

    This is a whole lot different than a parasite, who would be trying to open a BK *inside* a McDonald's!
    There is no knowledge that is not power. ~Hemingway

  5. #5
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    what I don't quite understand is the affiliate managers driving off ppc for their brand names so as to allow only their competitors into ppc slots for their brand names. presumably their thinking is that they're paying for fewer sales on their brand names which would've/could've/should've gone to them IF ONLY the ppc handn't horned in on their brand name.

    But if a competitor slips into the ppc slot then they're siphoning off business. Why don't the managers figure that the choice is between a lesser profit and profits going to a competitor?

    and why is it that the affialiate managers are happy to come down on ppc search but not on natural search. for example look at 1800contacts. the company is there for the first natural search slot but later natural search slots are filled up by affiliates. how is this different from pps--since they have to pay the afffiliate commission from natural search.

    I don't see why the affiliate managers don't see it as most advantageous to them to have all the first page search results route to them.

    That is, companies would naturally like to monopolize their brand names in the search results. Google won't allow them to do that. The next best way to achieve the same end would be to allow affiliates to fill up the rest of the page with their ads. As long as the merchant has the top spots on natural search they're getting most of the business anyway.

  6. #6
    Affiliate Manager mwkennedy's Avatar
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    As an AM who currently does not allow affiliates to bid on our company name or corporate trademarks, I understand why affiliates want to bid on these terms and phrases. However, I think the arguments for not allowing this practice are more compelling. But I will say that I am open to changing our stance if someone has a more valid argument than the points listed below.

    1) Because our brand name is our trademark, we have the legal right to control who can use it and who can't. Therefore, competitors can't simply bid on our company name without getting a friendly phone call from us followed up by a letter from our attorneys.

    2) If an affiliate simply links to our homepage from their PPC listing on our name, what value have they added to the shopping process to earn the commission?

    3) In many cases, these consumers aren't "searching for an unknown destination"...they are simply using search as a form of navigation. Which means these consumers coming through on our brand name are already aware of our company because they are already loyal customers of ours or heard about us through word of mouth. This means any customers we can acquire from this traffic should be converting at rates similar to direct load traffic, which means we aren't directly paying anything for these sales (except when they previously clicked through from an affiliate). If some of this traffic is coming through on affiliate PPC listings, we are actually lowering our profit margin for this traffic segment.

    4) The idea that a merchant should allow this practice in order to monopolize all the links on page 1 is a bit misleading. By allowing affiliates to bid on our name, we aren't doing any sort of competitive blocking. I still haven't seen a single example where a merchant's competitor is sitting at the top of page 2 of natural search listings just waiting for a PPC listing to drop off so they will move up to page 1. In most cases, the top listing on page 2 is another of the merchant's affiliates.

    5) Lastly, by allowing affiliates in on PPC listings for our company name, we actually dilute the traffic for everyone (ourselves and our natural search affiliates) on page 1 because there are now more relevant clickable links on page 1 but no increase in consumers entering the search. As an example, let's say we get 1000 consumers entering "FootSmart" in Google every day and 80% of those consumers use a result on page 1. That means 800 consumers will use a link on page 1. Now by not allowing affiliates to use PPC listings, there are 12 clickable links for those 800 consumers. But if we allow PPC listings by affiliates (and three affiliates take advantage of that), we actually increase that number of clickable links on page 1 to 15. This spreads out those 800 "click opportunities" over more links thereby diluting everyone's traffic from page 1.

    I know this thread originally started out as a discussion of the Google-Geico news but I do think that chitty brings up a good discussion that should be explored by everyone here.

    Thanks for letting me drop my two cents.
    Matt

    Matt Kennedy
    Affiliate Marketing Manager
    FootSmart

  7. #7
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    "Because our brand name is our trademark, we have the legal right to control who can use it and who can't. Therefore, competitors can't simply bid on our company name without getting a friendly phone call from us followed up by a letter from our attorneys."

    What law is broken? I see Prego using Ragu, Coke using Pepsi etc. in their commercials all the time. At my grocery store whenever i buy Coke, i get a printed Pepsi coupon to use on my next visit. Competitors use their competitors TM all the time.

  8. #8
    ABW Ambassador phillyburbs's Avatar
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    quote:
    Originally posted by TrustNo1®:
    "Because our brand name is our trademark, we have the legal right to control who can use it and who can't. Therefore, competitors can't simply bid on our company name without getting a friendly phone call from us followed up by a letter from our attorneys."

    What law is broken? I see Prego using Ragu, Coke using Pepsi etc. in their commercials all the time. At my grocery store whenever i buy Co ke, i get a printed Pepsi coupon to use on my next visit. Competitors use their competitors TM all the time.


    Trust:

    I've heard this stance used before, but this is probably the best way I've seen it explained. You're spot on!

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    If someone searches for Footsmart and I am Payless and I have an ad saying compare prices etc. then what is the problem? What is the difference between this and the Pepsi taste test?

    I believe a lot of companies are trying to take advantage of the infancy of the Internet to try and get more of an advantage in the short term. This strategy won't last, however, as can be seen in the Geico lawsuit.

    As long as I am not claiming to be Footsmart or Geico, then I have every right to advertise under those keywords. The purpose of a trademark is to avoid confusion, not to eliminate competition. It's easy for big companies to push smaller players around with C&D letters, but they will inevitably lose when they are actually challenged in court.

  10. #10
    Affiliate Manager mwkennedy's Avatar
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    You make a good point on the trademark law. I'm actually reading the current law now and have a call into our corporate attorneys to get their current interpretation.

    One loophole that I am aware occurs when trademarks transcend the brand itself and actually define the product group - like Kleenex or Band-Aid. But that obviously doesn't apply to Ragu.

    I will try to post later today with some more info and clarification.

    Thanks.
    Matt

  11. #11
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    1) Because our brand name is our trademark, we have the legal right to control who can use it and who can't. Therefore, competitors can't simply bid on our company name without getting a friendly phone call from us followed up by a letter from our attorneys.

    A: As of now the court has ruled that your competitors are allowed to bid on your trademark names. So it makes it a bit wierd to not allow your affiliates to bid on your trademark names--since you make a profit on affiliate sales but not on competitor sales.

    2) If an affiliate simply links to our homepage from their PPC listing on our name, what value have they added to the shopping process to earn the commission?

    Anyone familiar with search marketing knows that the greater the number of clicks the customer has to make to get to the thing he wants to buy--the less the likelihood that he will buy it. By linking directly to the merchant the pps affiliate shortens the distance to the sale. The direct links to the merchant from pps are actually more valuable to the merchant than the pps or natural search affiliates who take clients to their sites where they can choose again whether to go to the merchant or somewhere else. In effect, the pps affiliates who direct link are acting as the marketing dept for the merchant--only instead of being salaried they are commissioned.


    3) In many cases, these consumers aren't "searching for an unknown destination"...they are simply using search as a form of navigation. Which means these consumers coming through on our brand name are already aware of our company because they are already loyal customers of ours or heard about us through word of mouth. This means any customers we can acquire from this traffic should be converting at rates similar to direct load traffic, which means we aren't directly paying anything for these sales (except when they previously clicked through from an affiliate). If some of this traffic is coming through on affiliate PPC listings, we are actually lowering our profit margin for this traffic segment.

    The operant words above are "should be converting". If the statement above were true then competitors bidding on the trademark keyword "should not" make any money at all. But they do. That is, competitors bidding on your trademark name do make money. That's why Geico sued Google. Geico wanted to stop competitors from bidding on Geico's trademark keyword--because competitors were siphoning off traffic. So the statement above is not wholly true. In practice, there's a very big difference in the conversion rates between--to quote the terms above-- "loyal customers of ours [and those who]heard about us through word of mouth"


    4) The idea that a merchant should allow this practice in order to monopolize all the links on page 1 is a bit misleading. By allowing affiliates to bid on our name, we aren't doing any sort of competitive blocking. I still haven't seen a single example where a merchant's competitor is sitting at the top of page 2 of natural search listings just waiting for a PPC listing to drop off so they will move up to page 1. In most cases, the top listing on page 2 is another of the merchant's affiliates.

    This arguement confuses natural search and pps search. Natural searh and pps search are two seperate heirarchies. Ranking for natural search depends on algorithms developed by google, for example, to estimate the relevancy of a page. Ranking for pps depends on how much the marketer is willing to pay. There is no law against against merchants allowing pps search affiliates to bid on their trade names. There is a court ruling (see above) against merchants excluding their competitors from bidding on trade names. Since most of the traffic for a site from the search engines comes from page 1 of the results and most of the traffic from page 1 comes from the first three results of natural search--the best scenario for merchants is to have their own pages come up in natural search for the first three results and the rest of the natural and ppps links be affiliates.


    5) Lastly, by allowing affiliates in on PPC listings for our company name, we actually dilute the traffic for everyone (ourselves and our natural search affiliates) on page 1 because there are now more relevant clickable links on page 1 but no increase in consumers entering the search. As an example, let's say we get 1000 consumers entering "FootSmart" in Google every day and 80% of those consumers use a result on page 1. That means 800 consumers will use a link on page 1. Now by not allowing affiliates to use PPC listings, there are 12 clickable links for those 800 consumers. But if we allow PPC listings by affiliates (and three affiliates take advantage of that), we actually increase that number of clickable links on page 1 to 15. This spreads out those 800 "click opportunities" over more links thereby diluting everyone's traffic from page 1.
    ................
    This arguement assumes that traffic is spread out evenly on page one of the search results on google or overture. Not true. Only a fraction of the traffic goes through the pps heirarchy. most goes through natural search. And of natural search most go through the top three slots. So even with more links on the page the top three spots in natural search are still getting +-80% of the traffic.

    Here's a piece that discusses :
    How Search Engine Rank Impacts Traffic
    WebProNews | Staff Writer | 2004-07-12

    The research found that overall, advertisers should expect about a 10 times difference in potential traffic between the top and 10th rankings. The amount of potential traffic drops more than 40 percent between the number one ranking on Google and the search engine's number two ranking. At Yahoo's Overture the drop is more gradual.

    The full report is available online at the link below: http://www.webpronews.com/news/ebusi...tsTraffic.html
    http://atlasdmt.com/media/pdfs/insights/RankReport.pdf


    The real question is why do merchants allow natural search affiliates to optimize for their trademark names and dissallow pps search from bidding on their trademark names since both natural search on and pps search result in commissionable sales. The only links that are not commissionable are the links that the merchant has made themselves either by natural search or by pps.

  12. #12
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    So even with more links on the page the top three spots in natural search are still getting +-80% of the traffic.
    ///////////////
    hmm this looks to be between 50-60% for the first three slots depending on whether its google or overture.

  13. #13
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    Could someone fix the long URLs in this thread please, the scrolling makes it nigh impossible to read.

    Thanks
    Woz
    [url=http://www.dWoz.com/][b]dWoz[/b][/url] - serious webmaster tools & resources.

  14. #14
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    quote:
    If an affiliate simply links to our homepage from their PPC listing on our name, what value have they added to the shopping process to earn the commission?



    The answer is buried in the vagaries of human behavior.

    For some reason, a percentage of searchers WILL NOT click on the first listing. Yet they will drill down, sometimes way down, only to click on another listing that goes to the same place.

    The fact that people will click it even after passing up: 1) The merchant's own, usually #1, link, 2) Other, better-worded PPC ads, and 3) Lots of competitors, tells me that there IS some value that some searchers are finding in these PPC links that go to the exact same spot they could have gone to by clicking the #1 listing.

    Why do they click those?!? Why won't they click the #1 listing?

    Beats me!! I think it's just a psychological weirdness some people have.

    But why turn down their money just because they're weird??
    There is no knowledge that is not power. ~Hemingway

  15. #15
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    here's two shortened url's to the google geico story
    http://urlcut.com/google-geico
    http://urlcut.com/Google-Geico-Dispute

    here's the shortened link to the article on "How search engine rank impacts traffic"
    http://urlcut.com/HowSearchEngineRankImpact

  16. #16
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    Seems like in the long run if merchants start putting to many restrictions on affiliates, the cost for the placements they do get may start to escalate.

    How bout' sites like Shopping.com and other comparison shopping sites, how much of their traffic comes from brand searches?

    The Geico ruling is a great one at least in some instances. In the Google model where a merchant can disallow others from using their TM name in the ad copy it naturally helps the merchant ad rise to the top w/o to much trouble most of the time while the ads with lower CTRs tend to trend downward which provides the consumer with the most probable listing they may be looking for at the top while still allowing for comparison shopping.

    If on the other hand, it was fixed position inventory like the old Google sponsorships and Google could sell those fixed spots so that competitors of a merchant could lock up the top spots for a year at a time or some other fixed period would that be different?

  17. #17
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    quote:

    If an affiliate simply links to our homepage from their PPC listing on our name, what value have they added to the shopping process to earn the commission?


    Another answer- The affiliate paid for the PPC advertising, and you didn't, that's what value you are getting. You pay only when a sale is made.

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    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    LOL...the logic of a greed driven PPCSE affiliate knowing his domain pages have no value proposition to shoppers. The numbers game is to intercept search traffic and set cookies. All else requires work.
    Webmaster's... Mike and Charlie

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  19. #19
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    The numbers game is to intercept search traffic and set cookies. All else requires work.
    ////////////////
    actually you've hit the nub of the business model on the head. You can either put in time or money to get page rank. Its a trade off. You put in time for natural search and you don't have to pay for page rank. You put in money for pps and you can do more ads. The merchant benefits with more doors to his site either way.

  20. #20
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    quote:
    Originally posted by chittychittybangbang:
    The numbers game is to intercept search traffic and set cookies. All else requires work.
    ////////////////
    actually you've hit the nub of the business model on the head. You can either put in time or money to get page rank. Its a trade off. You put in time for natural search and you don't have to pay for page rank. You put in money for pps and you can do more ads. The merchant benefits with more doors to his site either way.


    Exactly. There's nothing wrong with the "put in money" model--except maybe in the minds of those who are too broke, too cheapskate, or too chicken to spend their own!

    There's nothing wrong with using the resources you have, and if money is one of those resources, spending it on advertising is a perfectly fine way to do business. It is not the duty of affiliates to make it easy on their broke/cheapskate/chicken competitors by refraining from bidding!
    There is no knowledge that is not power. ~Hemingway

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