Brand Bidding: everything you need to know about digital competition

Brand Bidding is already well known among advertisers on online advertising platforms. The strategy involves purchasing terms related to a brand's name, products, slogans, etc., in order to attract potential buyers from other companies.

However, although it has been used since the early days of online advertising campaigns, Brand Bidding can be considered unfair competition. As a result, it can bring not only legal implications but also damage to the brand's image. And you don’t want your business to face such a risk, right?

That's why, in this article, we will explain what Brand Bidding is and everything you need to know from both a strategic and legal point of view. Keep reading!

What is Brand Bidding?

Brand Bidding is the use of a brand’s name by third parties as a keyword in creating campaigns on online advertising platforms. It usually occurs in paid search engine ad auctions, like Google Ads and Bing Ads, but it can extend to other channels.

Competitors and partners of your company may adopt Brand Bidding—either out of ignorance or often in bad faith—with the intention of capturing users who are searching for your brand or your products on those search engines. As a result, you may end up losing potential customers to other businesses.

This practice has become common, and many companies have used Brand Bidding as an important part of their digital marketing strategy for a long time. For others, this strategy has not proven effective and has since been ignored.

However, there is now a legal understanding that Brand Bidding leads to customer diversion and, therefore, unfair competition between companies. So, it's important to be cautious about adopting this practice and ensure that other businesses don’t affect your business by purchasing terms related to your brand.

What happens when a brand practices Brand Bidding?

When a user searches for a brand on Google or Bing, they are likely looking to find that company’s website and its products.

These consumers should already be in an advanced stage of their buying journey: they already know your brand and are specifically searching for it, ready to purchase your products. Therefore, they could be your best customers, capable of increasing your conversion rate and improving the ROI of your campaigns on Google Ads and Bing Ads.

However, Brand Bidding tends to divert the user to the competitor, which displays their offer in search result ads. These paid links appear at the top of the search engine results, above the organic results. Depending on the ad auctions, they could appear in the first position, thereby receiving more visibility and clicks from users.

Moreover, in paid search ad auctions, Brand Bidding also tends to generate an inflated CPC (Cost Per Click), as more companies compete for that term, often with high bids.

The use of a brand by third parties can also lead to brand dilution, meaning the loss of its distinctive power in the market. After all, the brand is being used improperly by others, for purposes not intended by its owner.

What is Google’s position on Brand Bidding?

Google understands that registered trademarks can be used in the text and titles of paid ads in certain cases: when they are resellers, informational websites, or advertisers with permission to use them, for example.

However, Google does not investigate or restrict the use of registered trademarks as keywords for ads. Therefore, Brand Bidding is not prohibited by the platform’s policies. You can read all Google’s policies regarding registered trademarks on their website.

You can understand Google’s stance through its perspective on free competition, but also because Brand Bidding inflates advertisers’ costs. Therefore, it's advantageous for the search engine.

What is the legal view on Brand Bidding?

In Brazilian law, there is already case law on the practice of Brand Bidding as unfair competition.

One significant case involved two companies in the travel sector: one of them was purchasing terms with the name of the competing brand to promote their website in sponsored ads on the search engine.

Although the company claimed that their intention wasn’t to divert customers but to stand out in the market, their justification was not accepted. The Fourth Chamber of the Supreme Federal Court understood that the practice violated the Intellectual Property Law and imposed a fine.

What to do if your company suffers from unfair competition in Google Ads or Bing Ads?

If your company faces unfair competition in paid search engines due to Brand Bidding, it’s important to adopt measures to protect your brand. After all, you don’t want to lose customers to competitors, nor do you want your brand to be misused by third parties.

While you can legally take action against companies engaging in Brand Bidding, you can seek an amicable solution before involving the courts. This is what Branddi prioritizes in its strategies.

Firstly, we conduct monitoring using exclusive technology to identify the aggressors of your brand on the advertising platform. By monitoring Brand Bidding, you can identify three types of agents. Either through inattention or bad faith, they can all harm your brand:

• Competitors practicing unfair competition;
• Affiliates committing arbitrage, with ads that overshadow the brand of the product they are selling;
• Partners purchasing your institutional terms.

Then, our team mediates with these companies in a cordial manner, aiming to avoid litigation and show that Brand Bidding is detrimental to all the companies involved. These companies are then instructed to remove keywords from their campaigns that could lead to unfair competition.

In this way, it is possible to maximize marketing investments by reducing the CPC for keywords related to your brand and, of course, driving more traffic to your website. Each user who stops visiting the competitor and visits your website improves the performance of your ad account, increasing conversion rates.

To receive a free diagnosis and understand the impacts of Brand Bidding on your strategy, contact Branddi now.