Trademark bidding in PPC: Should you protect or compete?

Over 40% of businesses experience competitor brand bidding, increasing PPC costs by 30%. Brand presence is more important than ever in today’s digital advertising landscape.

When potential buyers search online, businesses want their names or products to appear first. But what happens when competitors bid on those branded keywords and outrank the actual brand owner?

This controversial PPC strategy, known as trademark bidding, allows advertisers to bid on their own or competitors’ branded keywords to gain profitable search traffic.

This article will explain how trademark bidding works, its pros and cons, ethical considerations, and strategies to protect your brand while leveraging branded search traffic.

What is trademark bidding?

Trademark bidding is a PPC advertising strategy where companies bid on keywords that include brand names or trademarks, either their own or those of competitors.

When Nike bids on “Nike running shoes,” it is an example of defensive trademark bidding, protecting its brand name. If Adidas bids on “Nike running shoes,” it is competitive trademark bidding. It is targeting Nike’s audience to divert traffic to its products.

Search engine marketing (SEM) frequently uses this tactic, especially on sites like Microsoft and Google Ads.

However, it presents ethical and legal issues, mainly when rivals try to deceive customers by ranking higher in search results than the true brand owner.

Is trademark bidding legal? Understanding Google’s policies

Trademark bidding operates within the pay-per-click (PPC) advertising framework, particularly in search engines like Google Ads and Microsoft Advertising. Below is a comprehensive analysis of trademark bidding:

• Advertisers determine the branded keywords: Businesses choose branded keywords, which contain a competitor’s brand name or terms unique to a certain product. A small sneaker company, for instance, might bid on “Nike running shoes” to draw in clients looking for Nike merchandise.
• Advertisers set up PPC campaigns: Advertisers create campaigns using Google Ads, Microsoft Ads, or other platforms to target branded keywords.
• An auction determines ad placement: Similar to all PPC advertisements, placement is decided by a real-time bidding auction in which rankings are influenced by variables such as maximum bid, Quality Score, and ad relevance.
• Users click on ads, driving traffic to the advertiser: When users search for a branded term, they may see ads from both the actual brand and competitors.

Types of trademark bidding

Trademark bidding strategies vary depending on a company’s goals, whether to protect its brand or gain a competitive edge. Here are the main types of trademark bidding:

• Defensive trademark bidding: To keep competitors from outranking them and stealing their traffic, a business bids on its own branded phrases.
• Offensive trademark bidding: A company bids on a competitor’s brand name to divert potential customers away from that competitor.
• Comparative trademark bidding: When permitted, advertisers compare their products directly to those of their competitors by using competitor-branded keywords in their ad content.

Why do businesses place bids for trademarks?

The following are the primary reasons why companies spend money on trademark bidding:

• Capture high-intent traffic: Target users already searching for a brand, increasing conversion chances.
• Prevent competitors from stealing market share: Ensure rivals do not outrank their organic results.
• Control brand reputation: Avoid misleading competitor ads that could harm their image.
• Boost visibility and awareness: Promote exclusive deals and manage search appearance.
• Attract brand comparisons: Influence undecided buyers weighing multiple options.
• Improve ad relevance and CTR: Brand familiarity leads to Lower CPC and better engagement.
• Retarget lost visitors: Re-engage users who did not convert through strategic remarketing ads.

Advantages of trademark bidding

Advantages of trademark bidding include:

• Prevents brand hijacking by competitors: If a competitor bids on your brand name and you do not, their advertisement may appear above your natural search result. Customers may be misled by this and visit their website rather than yours.
• Improving conversions and click-through rate (CTR): Branded search terms typically suggest a strong desire to buy. According to a WordStream study, the CTR for branded keywords is over 30%, whereas that of generic terms is only 3-5%.
• Allows competitive targeting: Businesses can capture potential customers by exploring alternatives by bidding on competitor trademarks. For example, Samsung may bid on iPhone 15 deals to draw in customers considering transferring from Apple. While aggressive, this strategy can work well with strong value propositions in the ad copy.
• Encourages the visibility of new brands: It might be difficult for startups to compete with industry giants. Bidding on well-known competitors’ brand names raises awareness and drives early-stage traffic. For instance, a new shoe company may bid on “Nike running shoes” to compete with a market leader.

Disadvantages of trademark bidding

Disadvantages of trademark bidding include:

• High cost-per-click (CPC): Branded keywords often have higher CPCs because of fierce competition. Costs can soar if several bidders compete for the same brand name, which could result in a more significant marketing spend and a lesser return on investment. For instance, CPCs for branded keywords in the legal sector might surpass $50 per click!
• Possible legal risks: Numerous businesses closely watch for and report trademark infringement. Google Ads permits bidding on trademarked terms but prohibits using them in ad text without consent.
• Potential damage to a brand’s reputation: Brands that engage in aggressive trademark bidding may come across as unethical. Consumers may have a bad impression of a company if they witness it stealing searches from rivals.

How to implement an effective trademark bidding strategy

Implementing an effective trademark bidding strategy is crucial for maintaining brand integrity and optimizing advertising efforts. Here’s a structured approach:
1. Protecting your brand through defensive bidding: You should always bid on your brand name to keep competitors from stealing your traffic. Having an ad guarantees maximum visibility, even if your organic rating is high.
2. Ethical bidding for competitor trademarks: When placing a bid on a competitor’s brand name, be sure that:

• Your advertisement does not mislead users.
• You emphasize the special value of your product
• You adhere to Google’s advertising guidelines

3. Track and modify your approach: Analyze using Google Ads Auction Insights:

• Who is placing bids on your brand?
• How often do advertisements for competitors appear?
• What is the minimum bid amount required to remain competitive?

4. Examine different approaches to targeting: Instead of placing direct bids for rival trademarks, take into account other strategies such as the following:

• Bidding on “comparison” keywords (e.g., “Nike vs Adidas”)
• Using SEO to rank for rival terms naturally
• Implementing remarketing campaigns to recover lost traffic

Defensive vs. offensive trademark bidding: Which strategy works best?

Defensive bidding protects your brand by ensuring competitors do not hijack your traffic. It helps control SERP visibility, boosts CTR, and safeguards brand equity, but it can be costly if there is little competition for your name.

Offensive bidding targets competitor brand names to capture their audience. It’s great for market share growth and challenger brands but comes with risks like higher CPC, lower ad relevance, legal restrictions, and potential retaliation.

Best strategy? Established brands should prioritize defense, while newer brands may benefit from offense. A mix of both works best in competitive markets, protecting your brand while strategically targeting competitors.

Is trademark bidding potent?

Trademark bidding is a potent but intricate PPC strategy. Understanding its financial, ethical, and legal ramifications is essential, whether you employ it for competitive targeting or defensive protection.

Trademark bidding can boost conversions, protect brand searches, and raise visibility. To avoid potential problems, organizations must balance expenses, competition, and compliance.

Q. 1 How do I know if competitors are bidding on my brand?

Use Google Ads’ Auction Insights or tools like SEMrush and SpyFu to track competitor activity on your brand keywords.

Q. 2 Should small businesses engage in trademark bidding?

Bidding for trademarks can benefit small businesses, but expenses should be controlled. While defensive bidding is advised, competitor bidding should be done wisely to avoid ethical or legal issues.

Q. 3 Can I stop competitors from bidding on my trademark?

Although bidding cannot be stopped, you can apply for Google’s trademark protection program and report deceptive advertisements that break the rules.

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