More Evidence Why Keyword Advertising Litigation Is Waning

December 27, 2016 · by Eric Goldman · in Marketing, Search Engines, Trademark

A venerable and classic Internet Law question: when a consumer uses a trademark as a search term, what are they looking for? If they are seeking the trademark owner–and only the trademark owner–then competitive keyword advertisers may encroach on the trademark owner’s goodwill and “steal” the trademark owner’s customers (and the search engine/ad network may be profiting from this “theft”). In contrast, if consumers have heterogeneous search objectives when using a trademarked search query, trademark law would overreach–in ways that would significantly harm social welfare–if it prevented ads from parties other than the trademark owner.

Nearly a decade ago, I argued–without empirical proof–that searchers had heterogeneous search objectives when using trademarks in search queries, which made competitive keyword advertising both permissible and desirable. Since then, some empirical studies have supported this argument, especially the Franklyn/Hyman study; see also the Tucker/Bechtold study.

A new empirical study, Jeffrey P. Dotson et al, Brand Attitudes and Search Engine Queries, 37 Journal of Interactive Marketing 105 (2016), provides further support for this conclusion. The study is based on a rich dataset: a time-series of actual Google search queries in the cellphone and automotive categories by opted-in consumers. The authors don’t consider the legal questions, but their conclusions buttress the perspective that consumers have heterogeneous motivations when they use trademarks in their search queries.

The authors say:

there are many reasons a user might submit a brand search query. Users who are shopping in a category are more likely to search for any brand in the category; users are more likely to search for brands for which they hold positive attitudes; users who own a brand are more likely to search for the brand; and users who are category enthusiasts are more likely to search for all brands in the category.

They provide some additional details:

We also find evidence that that customers who are actively shopping are more likely to search for any brand in the category. Customers who indicated that they made a purchase or intended to make a purchase (“In-Market”) during the observation period were significantly more likely to search for any brand (1.4 times more likely for both categories). Similarly, customers who indicated that they “always pay attention to the category so that they know when to buy” are more likely to search for all brands in the category (1.4 times more likely for smartphones and 1.2 for vehicles.)…

We also find that owning a particular smartphone or vehicle brand is a very strong predictor of brand search, with the odds of searching being 2.5 times greater for brand owners versus non-owners in the smartphone category and 3.5 times greater in the vehicle category. This large increase in brand search among owners (regardless of whether that user is actively shopping), could be partially due to owners searching for information about how to use the product….

customers who are highly engaged in a category are more likely to search for brands in that category, even when they are not in market. The two categories that we studied, smartphones and automobiles, are categories where a high percentage of the population has enduring product importance and would be expected to continue to engage in product search even when they are not actively shopping (Bloch and Richins, 1983). For these types of categories, brand managers should keep in mind that a substantial volume of search is coming from these “enthusiasts,” whose interest in brands many not reflect the larger community of potential shoppers…

The authors also note that technological innovation will continue to shape consumer search behavior:

In the future, search behavior is likely to evolve as technology and search engines evolve. Search engine providers are constantly innovating to make search results more useful and this could lead to major shifts in brand-search volume that have nothing to do with how consumers perceive those brands….

Overall, this study provides further evidence that consumer motivations behind search queries are complex and diverse. Because of this, the evidence is making it provably false that a searcher using a trademark in their search query is looking only for the trademark owner. So if you still hope to argue that consumers searching for the brand want only that brand, bring some citations.

I’ve repeatedly declared that the keyword advertising litigation wars are over, and the primary reason is that we have scant evidence that competitive keyword ads confuse consumers in a way that trademark law recognizes (or should recognize). The Dotson et al study provides more reason to believe that searchers want a broad range of information in response to a trademark search query, and trademark law should support, not thwart, that outcome.

Blog Posts on Competitive Keyword Advertising

* Court Dumps Crappy Trademark & Keyword Ad Case–ONEPul v. BagSpot

* AdWords Buys Using Geographic Terms Support Personal Jurisdiction–Rilley v. MoneyMutual

* FTC Sues 1-800 Contacts For Restricting Competitive Keyword Advertising

* Competitive Keyword Advertising Lawsuit Will Go To A Jury–Edible Arrangements v. Provide Commerce

* Texas Ethics Opinion Approves Competitive Keyword Ads By Lawyers

* Court Beats Down Another Competitive Keyword Advertising Lawsuit–Beast Sports v. BPI

* Another Murky Opinion on Lawyers Buying Keyword Ads on Other Lawyers’ Names–In re Naert

* Keyword Ad Lawsuit Isn’t Covered By California’s Anti-SLAPP Law

* Confusion From Competitive Keyword Advertising? Fuhgeddaboudit

* Competitive Keyword Advertising Permitted As Nominative Use–ElitePay Global v. CardPaymentOptions

* Google And Yahoo Defeat Last Remaining Lawsuit Over Competitive Keyword Advertising