Media: All about ... Google's new keyword policy

Its keyword policy has put the cat among the pigeons, Alasdair Reid says.

There's something spectacularly perverse about the extent to which Google's employees, from the highest management and technical echelons to the humblest of sales executives, have an unshakable belief that they're the good guys - despite an ever-lengthening queue of people lining up to inform them that, actually, their whole attitude often leaves much to be desired.

The search giant's change in policy in the UK with regard to trademarks, which became effective on Monday, is shaping up to be a classic case in point. Google previously helped advertisers maintain a substantial exclusion zone around keywords relating to legitimately held trademarks. Now it doesn't.

Google cites the example of the fictional Acme financial services company. If you type "Acme loan" or "Acme credit card" as search terms, Acme products will still come top because rivals can't outbid Acme on such specific terms.

Previously, though, if you just typed in "Acme", the company's products would still have been the highest ranked (or only) financial services products on the search. Now that won't necessarily happen. A rival company can now bid for the right to have the highest-ranked financial products when the single "Acme" word is entered.

Small potatoes, you might argue. And it's also true that this has been the policy in the US and Canada since 2004. But, for UK advertisers, this represents a considerable upheaval, especially since it was only announced four weeks ago. Almost inevitably, it will force many advertisers to up their search spend in order, not to put too fine a point upon it, to cover their assets.

What irks many of them is that this was never mentioned in meetings between Google and ad industry trade bodies earlier this year, and there has been not the slightest effort on Google's part to consult its advertising customer base, either at a group or an individual level.

There's also irritation about the way in which Google has chosen to present these changes as being motivated to help give "users greater choices and help them make informed decisions" - implying along the way that the attitude of some advertisers may actually be contrary to the interests of consumers.

Even more irksome is the fact that the move has not been presented in such terms to financial analysts - here, the emphasis is on the extra revenue that can be extracted from each advertiser.

1. Google has had something of a rollercoaster ride over the first third of 2008. In April, research from Millward Brown estimated that Google was now the world's most powerful brand. But, for the first time in its history, there have been question-marks about growth. At the end of March, Google revealed that growth in clicks might be disappointing for the second month in a row. This contributed to a slump in its Nasdaq-quoted share price, which had been at a high of $747 in November 2007, yet, by mid-March, had fallen below $425. Results for the first quarter were good, however, with profits up by 31 per cent, click rates far better than forecast and the US economic slowdown as yet making little impact. The share price is now back above $570.

2. The official response from the UK ad industry to Google's change in keyword policy has been muted, even resigned. ISBA deemed it "disappointing".

3. The IPA has also expressed "dissatisfaction". Nigel Gwilliam, the head of digital, says: "More than ever, brand owners need to work closely with their agencies to assess the impact of this hastily introduced policy change on their search and communications strategies."

4. The UK chapter of the Interactive Advertising Bureau hopes to publish a new best-practice resource for advertisers some time in June.

5. One major advertiser - Tesco - has, however, been moved to take the "high moral ground", stating that it will not attempt to bid on search terms relating to its competitors and urging those same competitors - and other major brand owners in the UK - to follow suit. A number of other advertisers - including Mercedes-Benz and O2 - have publicly admitted that they too are considering their position. ISBA is also believed to be urging members to consider entering into informal agreements not to compete on certain relevant keywords where it's clear that a trademark infringement may be involved.

WHAT IT MEANS FOR ...

GOOGLE

- Absolutely nothing. This row will barely have registered with Google's worldwide chief executive, Eric Schmidt. The company is so powerful (utterly dominant in search in the UK as in the US) that it knows it doesn't have to "do" dialogue. So it doesn't.

CONSUMERS

- There's been a wealth of blog debate about this. Google, of course, is increasingly demonised in a routine sort of way these days as an insensitive and rapacious multinational, but there's also a strong strand of opinion that the laws of caveat emptor apply.

- Give consumers more credit, many observers say. If they've set out to find information on the Acme credit card company, they're not likely to be fooled when they're offered a listing from a rival credit card company.

ADVERTISERS

- Search just got even more expensive. The Tesco initiative is intriguing, as is ISBA's prompting behind the scenes. ISBA sources point out that informal agreements have worked in certain sectors of the US market - but readily concede that, in other product categories, they clearly have not.

- The philosophical problem with this sort of approach is that it presupposes a cosy cartel-like world carved up by a few dominant advertisers. This suits the market leader and, to a certain extent, its closest challengers. The company at number five in the marketplace may wish to take a more aggressive outlook, however - and no-one who believes in unfettered competition could really blame it.

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