The Australian Small Business Blog

Monday, July 16, 2007

Godzilla (ACCC) vs Google

The Australian Competition and Consumer Commission has decided to take on Google. This should be fun. The ACCC has recently been taking on (and losing) a lot of high profile cases. It has now taken on Google. But first the facts.

An advertiser on Google used keywords of a competitors to show their ads in Google Adwords. This is quite common. But then what they did was to use these keywords as the headline of their ad. I would regard this as unethical. The businesses involved were two car companies, Kloster Ford and Charlestown Toyota. The company using their keyword phrases (the actual business names) was Trading Post, a competing business. What Trading Post did that was unethical, was to have in the headline of their ad, the names of their competitors’ businesses. So that people may have clicked on these ads thinking they were going to Kloster or Charlestown websites, only to be taken to Trading Post. (More here.)

Trading Post settled with these businesses, but it didn’t stop there. The ACCC then decided to go after Google for allowing these ads to appear in the first place, and also for not making sufficiently
clear the difference between advertising and organic search links.

As an advertiser on Google, I do have some strong opinions on all these matters.

Firstly, I believe that the Trading Post use of the business names of its competitors in the headlines of its ads was deceptive conduct. This was passing themselves off as their competitor which is not only unethical, it is also illegal. However, I am unsure whether this was deliberate. One of the little known features of Google Adwords is the ability to insert the chosen keywords into the ad headline automatically. So you may have a hundred keywords, and rather than writing out a hundred ads, one for each keyword phrase in a headline, you can do it once. So Trading Post may have identified this as a keyword phrase they wanted, and it automatically was added to the headline. I would regard this as careless, or even negligent, but maybe not deliberate. But, of course this is wide open to debate.

The second issue is the use of others keywords, so your ad appears alongside your competitors. Now, as long as you are not passing yourself off as your competitor, I don’t see this as such an issue. It is like parking a car with your signage on it in front of your competitor’s store in a public parking space. They may not like it, but it is not illegal. As long as the signage says nothing defamatory, this is ok. I may not do it myself, but in the commercial cut and thrust, it is ok.

If you type in well known brands of cars such as BMW, you will see ads for other car businesses. But unless they are trading in BMW’s you won’t actually see the name BMW in the ad. What Trading Post did, was to use their competitor’s name in their headline- a step too far.

Putiing aside the morality of this, I also question the value of this type of advertising. If I type in “Kloster Ford” and I click on a headline saying “Kloster Ford”, it is pretty clear I am looking for their website (as opposed to just Ford Dealers). So if I get diverted to Trading Post, I am probably going to be annoyed. Not a good first impression for your website visitors to have! The marketing value of being on the same page, but without the name “Kloster Ford” in the ad is more debatable. Since in adwords, you only pay if someone clicks on your ad, if you have a compelling call to action, there is little downside. Unless the ACCC decides to get involved!

While the issues with Trading Post are fairly straight forward, the question of taking on Google is less clear. They are being held to account because they allowed this type of advertising in the first place. The only way that Google could stop this kind of advertising is with human screening of the millions of ads on their website. And even then, they would not stop the really determined. We have also seen similar issues with people unethically putting ads in eBay. It is my belief, that there should be an easily accessible complaints process to Google where someone feels they have been hardly done by, with Google sanctions: like ejection from their search engine- for the worst offenders. This is probably the best penalty you can think of. It would be like being barred from the Yellow Pages.

If the ACCC is successful, and I am sure this would be appealed if they were, you would have the situation of a small market trying to dictate to Google. May they then introduce special pricing to Australia, or maybe just decide just to make their search engine unavailable here.

The other ACCC complaint is that there is insufficient differentiation between organic and paid listings. I believe they are clearly marked, and the statistics are that organic listings are three times more likely to be clicked on than the ads. So I think that is a clear sign that most users can differentiate between the two as well.

Another point is that you can optimise your website (or I could anyway) so that you are on the front page in organic search. So is there really any difference in the end? It is all advertising.

This case is being watched worldwide as it has major implication for the search engine industry.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems.

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Unknown said...


The misspelling in this statement is a bit freudian, I've got to say:
"Putiing aside the morality of this, I also question the value of this type of advertising. .." (I see by the freudian slip that somewhere you recognize the conflict in meaning.)

I have to admit that I resent the use of the term 'morality' here.
There is no morality in business or law, in the higher sense, either personal or the wider sense.
There is only ethics.
And the ethics of any business is defined by law, at best.
Law defines what cannot be done; commonly after the fact as is the case here. (Cue the ACCC here for an undeserved bow...)

The ethic of business is essentially: "What you can get away with."; and the law is often manipulated by influence.

What would be more interesting is to ask:
1) Why does the ACCC bother with such a minor -- as you have pointed out almost counterproductive -- effort?
2) Or, more correctly, what is the politics behind such a senseless effort?
I'm sure there's a story there somewhere.

The ACCC at best defines the rules of the game; but the final ruling belongs to the judgment of the consumer and the marketplace.
The better educated and aware the consumer, the less need for rules in the game.

If as professionals and technicians , not to mention persons, we allow morality to be defined by the ACCC then we contribute to the dumbing down across the board. And that, I think, is truly a morally reprehensible position.

I'm sure this post sounds cynical and sarcastic, but it isn't really. I's say the words show a respect for the consumer, and for myself. - What do you think?


Anonymous said...

Hello, Could you please answer this question?

A direct competitor is using our Business name on their website in their keywords, are they allowed to do this?


Dr Greg Chapman said...

Hi Anonymous,

You should report such conduct. I believe you will receive a very sympathetic hearing from the ACCC.

snakeman said...

We have had the same issues you raised - someone bootlegging our name to get to the top of google searches. Our business at: and does reptile parties and the like and we had another company bootlegging our business name and trademarks and using them to fool Google and others to find their website, which as a result was top on google searches instead of us. Because we owned the registered trademarks (including our business name) we stopped them under threat of suing them, (actually we killed the carefully planted backlinks on chinese and arabic sites, which was the real problem, leaving their site high and dry so to speak and falling of the search results).
That same company (the bootleger), is now bootlegging another reptile show company's name (animal tracks) using a google ad for the same word combination, even though it (animal tracks) is a registered business and trademark.
The business owner of aninal tracks, web domain hasn't found out yet, but if our past losses are anything to go by, will have lost dozens of clients and many thousands of dollars in income to the bootlegger.
Problem is the bootlegging company is run a couple of young inexperienced blokes with no money and so suing them is probably a waste of time.
It'd be nice to see the ACCC close them down, but I doubt they'd do it!
For everyone else here, I suggest trademark your businessname and sue any bootleggers for all they have.
All the best
The Australian Snakeman


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