Google announced today that, as of May 5 2008, it will allow open keyword bidding on all terms in the UK and Ireland, bringing these territories in line with the US and Canada. Simply put, this means that the search giant has abolished its previous system in which a registered trademark could not be bid on by competitors. Previously, competitors could only show ads for trademarked terms by "broad matching" against other words in the search query - for example, a search for "bigmouthmedia search agency" could also show ads for competitors using the broad match keyword "search agency".
Open keyword bidding (which rolled out across the US and Canada in 2004) means that competitors can now bid on a registered trademark, although they will not be able to use trademarked terms in their anchor text or text snippets.
For many, this is unlikely to be welcome news, although some major price comparison sites could see advantages. Until now, clients in the UK and Ireland have benefited from a large amount of relatively cheap traffic from searches on their brand name. The new move is likely to mean that budgets will need to be realigned towards branded search terms as trademark holders and competitors bid for the top spots on crucial brand keywords.
How does this impact the search industry?
Google has given the search industry a month's warning about this important change. But how exactly will it affect the industry at large?
For starters, quality score calculations are threatened, as dramatically reduced click through rates for the trademark holder will increase the cost required to maintain visibility for searches for their own brand. A higher CPC (Cost Per Click) for brand terms will also be an important issue. Previously, advertisers with trademarked terms experienced low CPCs, as they were the only advertiser allowed to appear in the paid search space. But from May 5, these advertisers will be vying for top positions with their competitors on crucial brand keywords. So for larger clients at the top end of the PPC spend, Google's change of position will almost certainly cause several million pounds worth of spend month on month.
What's more, it's likely to have a substantial negative impact on search agencies with a CPA (Cost Per Acquisition) business model. Costs are likely to rise significantly and could threaten the survival of firms who are dependant on their PPC campaigns for liquidity. Nevertheless, agencies in the UK and Ireland with a large number of clients based in the US, such as bigmouthmedia, will already be well-equipped to handle this.
Additionally, the shift in policy is likely to be a dramatic game changer for affiliate marketing campaigns. Traditionally, affiliates are geared to work within tightly restrictive brand bidding controls agreed with their clients. Google's change means that companies will need to consider removing the restrictions on brand bidding so that a competitor's adverts can be displaced by affiliates.
Introducing open keyword bidding in the UK and Ireland is certain to be a huge money generator for Google and would seem to be a quick antidote to Google's flattened share value after reports of ad click growth levelling off.
Keyword bidding across the rest of Europe will remain the same, for now at least. But the shift seems a strong sign of intent to change the way keyword bidding operates. Furthermore, the instant reactions from a number of agencies have added fuel to speculation that lawsuits could be brought against Google by influential brands, and it's likely that we'll see a number of high profile cases cropping up in the coming days and weeks.
