It could be that someone is using a strategy to hunt down users who type your brand name into Google. The practice, known as buying terms from competitors, places advertisements for other companies just when someone is searching for your business.
But is it worth betting on this type of strategy to win customers instead of the rival? The answer isn't simple. Investments in Search Ads are growing year after year, making keyword auctions increasingly competitive and expensive.
If you want to fully understand how this strategy works, what its real risks are and when it can bring a return, check out our complete guide. We explain everything you need to know about buying terms from competitors and whether it's worth it!
What is buying a competitor's term?
Purchasing terms from competitors is a paid media strategy in which a brand creates campaigns using the names of rival brands as keywords. The objective is simple: appear when a user searches for the name of another company in the same sector or for its products.
It's a common strategy on ad platforms, with Google Ads being the best-known example. In Google's keyword auction system, any advertiser can choose terms related to competing brands and compete for space in sponsored search results.
Where is the line between healthy competition and abusive practice?
Brazilian law does not prohibit the use of someone else's trademark as a keyword. In other words, buying a competitor's term on paid media platforms is not a crime. But the recommendation is that this strategy be carried out carefully, observing brand rights, competitive loyalty, and consumer protection.
In Brazil, the Industrial Property Law (LPI), Law No. 9,279/1996) provides for provisions that deal with unfair competition. Article 195 defines a crime who”employs fraudulent means to divert, for your own or someone else's advantage, someone else's clientele”.
Article 209 recognizes the right to compensation for damages caused by unfair competition or trademark rights violation, regardless of whether it demonstrates concrete harm, in cases where legal aggression is evident.
Casas Bahia (VIA S/A), for example, has Sued Magazine Luiza for misuse of their marks in sponsored links of Google Ads in 2024.
In a recent decision, Superior Court of Justice (STJ) Did you consider that the purchase of a keyword containing a competitor's trademark may constitute unfair competition, provided that certain requirements are present.
The STJ understood that, when the trademark used as a search term is identical or very similar to the competitor's trademark registration, when it operates in the same business, and when the use of that term may violate the brand's identification and investment functions (i.e., obfuscate identification or take advantage of the reputation built by the competitor), then the practice may be considered abusive.
Another point that distinguishes the acceptable from the illegal is the level of confusion caused to the consumer. If the advertising campaign or sponsored advertisement induces the public to believe that they are accessing or relating to the competing brand, or if there is a real risk of customer diversion due to mistaken expectations, then there is strong evidence of abuse.
When is it advantageous to buy the competitor's term?
Buying terms from competitors can make sense when tied to a larger company plan. See when this strategy is used:
Situation 1: in the race for attention in competitive markets
Brands that are in sectors with high competition and low product differentiation (several players offer almost identical solutions) use the purchase of competitor terms as a way to Conquer a larger share of the public.
In these cases, achieving prominence in the organic search is generally not enough. The user, in this context, is exposed to multiple options and tends to choose who presents himself in the most accessible or convincing way at the time of the research.
Situation 2: when the brand is not yet known
One of the biggest difficulties faced by companies launching or expanding is overcoming the barrier of lack of recognition. In markets dominated by established players, acquiring qualified traffic requires time and heavy investment in branding and SEO.
However, buying terms from competitors can “accelerate this process”. Positioning itself with established brands, the company is able to quickly reach an audience that already shows interest in solutions in the same segment.
Situation 3: when the public already knows the brand but is considering alternatives
Modern consumer behavior is marked by the search for options before making a decision. Even after interacting with your company, it is common for them to research competitors before closing the purchase.
Reappearing in the results during the search for the competitor, the brand seeks to ensure that its proposal remain competitive until the last stage of the buying journey.
What are the risks?
Behind the gain in visibility are some risks that could compromise both the results of the campaign and the brand's reputation.
These are the main points of attention:
Inflate the CPC
When you decide to contest the term of a competitor in Google Ads, you enter an auction where the brand owner himself is generally willing to Pay high to protect your position. This generates a dispute that Make the Cost Per Click (CPC) increase.
In that case, you, as an advertiser, can pay much more for each click than you would in generic or long-tail terms.
Attract unqualified clicks
Most users searching for a brand may not be open to knowing another option. Often, the user already intends to close with that specific competitor, and this leads to a common problem: people click on the ad but quickly leave the site without interacting or converting.
These accesses generate costs without bringing results, because they increase the CPA (Cost per Acquisition) and impair campaign quality indicators, such as the Quality Score.
Generate processes
There is also the legal risk. Brazilian law allows the purchase of terms from competitors, but considers the use of a trademark abusive in a way that causes consumer confusion or customer diversion.
If the ad or landing page doesn't make it clear that it's another company, the competitor can claimand unfair competition.
What are the sectors in which this practice is common?
There are sectors in which the purchase of terms from competitors in paid media is more present because they share some characteristics: high competitiveness, attractive margins and direct disputes between players that offer very similar solutions. Sectors where the practice is common:
- Technology and software (SaaS);
- Telecommunications;
- Financial services;
- E-commerce and retail;
Education; - Tourism and airlines
How to protect your brand and still grow in paid media?
There are two solutions when it comes to protecting your brand from competitors who buy your terms on paid media:
- The first solution is defense, through the best practices of Online Brand Protection to monitor competitors' paid media actions;
- The second is the outgrowth, using more ethical alternatives to scale campaigns.
In front of the defense, the competition monitoring consists of following the paid search results linked to the name of your brand.
The logic is simple: once you identify third-party ads that use your brand term, you can measure the impact on metrics such as CTR and CPC. The brand can also contest inappropriate use on the ad platform and even gather evidence for lawsuits based on the Industrial Property Act.
In terms of ROI (Return on Investment), monitoring avoids wasting budget with clicks artificially inflated by unfair competition.
It is clear that buying terms from competitors involves risks, including legal risks. If you don't want your brand to become a target, you need to invest in monitoring and auditing processes to identify unfair competition.
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