From that thread:
A friend of mine attended a Google University seminar at Earls Court (London, UK) on Thursday last week. Apparently one of the guys from Google said that they were planning to phase out affiliate bidding on AdWords ‘very soon’. The reason – showing several ads for the same merchant reflects badly on the user’s experience.
I’m a full-time affiliate who primarily uses AdWords to send customers to the exact product page on a merchant’s website. If this is true quite frankly I’m in trouble. I called my account rep immediately in horror and he said he’d heard nothing of the sort. I would certainly hope Google would give plenty of warning if they were planning such a huge change.
The implications are significant here – the affiliate industry, which makes a lot f money arbitraging trademarked keywords, would be dramatically impacted. And Google stands to lose what may well be a significant revenue stream. But I sense there may be more at work here than merely “improving users’ experience.”
The UK information may be unfounded rumor, but the fact is, Google (and Overture) face a very serious threat from lawsuits over trademarked terms. In short, Geico (yup, owned by Google hero Warren Buffet) and American Blinds both have very serious complaints pending against Google, and both litigants are not going to go away. The cases are winding their way toward what could be a very public and very unpleasant discovery period.
Their beef? Competitors are buying their trademarked terms as AdWords and profiting from the confusion (ie other insurance companies were scooping up “Geico” as an AdWord, and driving customers to competing sites.) Interestingly, perhaps due to the fracas, there are no potentially infringing AdWords anymore on the term Geico, though a search for American Blinds still shows competitors attempting to make hay on that company’s name.
Google’s initial defense to these suits has been to claim that A/Google only uses trademarks in “internal computer algorithms to determine which ads to show,” and B/ that the “process is not visible to users and therefore can’t cause them to be confused as to the origin of goods or services displayed in the ads.” (More in this Cnet story, which I am quoting.)
This argument has been viewed with skepticism by the courts, which have ruled that Geico can go ahead and sue. As it girds for the fight, Google, which previously had been limiting the purchase of some trademarks on a sort of hand-rolled basis, altered their AdWords policy to let anyone bid on a trademarked term. While the official reason given for the change was “better results”, most legal observers I’ve spoken with say the real reason was legal consistency: you can’t be fighting the Gecio and American Blind lawsuits, claiming that you’re simply an intermediary, while at the same time protecting some trademarks.
What is not clear to me is whether the original source was claiming that Google was going to ban affiliate ads altogether – which would be a very large hit to revenues – or just the practice of affiliates using trademarked terms. In either case, Google could narrow or extend the policy with regard to competitors who buy their rivals’ keywords. It remains to be seen.
If Google does shift strategy and ban the use of trademarks in AdWords, the suits will clearly be moot, and the company will have avoided what could have been a damaging blow to their corporate image. After all, having the courts rule definitively that you’re profiting through an illegal practice is not exactly good business. Just ask Microsoft.
Tip of the Hat: Majestic Research.
Update: Good reading in response to this post and the original rumors: SEWblog.