Image courtesy Shutterstock.com.

A Wisconsin appeals court this week affirmed a circuit court’s ruling that it’s OK to use trademarks as keywords to trigger the display of paid search ads. The court’s conclusions are in line with search engines’ policies with regard to trademark bidding and with a Federal case decided last year in California.

The Wisconsin case, which involved two personal injury law firms, centered around what it means to “use” a name for advertising purposes.

In the 2009 lawsuit, the owners of the Habush Habush & Rottier firm accused competitor Cannon & Dunphy of violating their privacy by using the terms “Habush” and “Rottier” as keywords in their search advertising campaigns on Google, Yahoo and Bing.

The Wisconsin statute in question says people are entitled to relief if their privacy is invaded, and one definition of invasion of privacy includes:

The use, for advertising purposes or for purposes of trade, of the name, portrait or picture of any living person, without having first obtained the written consent of the person or, if the person is a minor, of his or her parent or guardian

The appeals court affirmed the circuit court ruling, likening bidding on trademarks to one business locating its office near that of another, more established business, to take advantage of the flow of potential customers who come there.

“This strategy undeniably takes advantage of the name of the established business and its ability to draw potential customers, but the strategy does not ‘use’ the name of the business in the same way as putting the name or image of the business in an advertisement or on a product,” the appeals court wrote in its decision.

This question of whether it’s acceptable to use competitors’ trademarks as keywords, has been the subject of longstanding debate in the search marketing business, but it’s growing clearer that what has become standard practice — because of search engines’ policies — will likely stand up to legal scrutiny.

As Google announced late last year, the company began on February 13 to replace free listings on Google Shopping to Product Listing Ads in those 11 countries. To encourage advertisers to adopt the new product, Google is offering a credit to marketers in those countries who set up a PLA campaign before April 12.

Those who don’t begin to purchase the paid product will see their free product listings, and the traffic that they drove, disappear from results.

In the U.S., Google made this same switchover in mid-October and says it’s seen a lot of success. The PLAs are definitely getting praise (and budget) from some marketers, but others complain that small merchants are being shut out by bigger players.

Following, thoughts from marketers about what they like, what they don’t like, what needs to be done now, and what they’d like to see in future releases. (Note: This is a significant update with a lot of inter-related changes, so we can’t hope to get to everything here, but stay tuned as we continue to cover the implications.)

The Good Stuff

Marketers acknowledge that we’re living in an always-on, multi-device world which warrants a different approach to reaching potential customers. It also makes sense that one would want to deliver different creative to people depending on the context — whether they’re on-the-go with their smartphone, or multi-screening on the couch with their tablet.

And, no one is arguing that the current process of deploying and managing multiple parallel campaigns to deal with this is particularly fun or efficient.

“Until now, the process for segmenting [...] traffic for bidding and ad copy purposes has been needlessly cumbersome, requiring advertisers to duplicate whole campaigns several times over. Enhanced Campaigns will help in that area,” said Mark Ballard, research analyst for the RimmKaufmann Group.

Other new capabilities get praise from Jeremy Hull, director of search at iProspect: “Many features are excellent additions to AdWords functionality; the bid boosting, sitelink management, and new reporting features will help advertisers evolve their view of paid search more in line with that of an omni-channel strategy.”

Hull is referring to new functionality that will change up the way ad extensions work, which Google calls “Upgraded extensions.” First, extensions can now be created either at the campaign or at the ad group level. Additionally, marketers will have more control over when they appear — by device and by time of day. For example, a marketer may want to display a call-to-action on smartphones designed to drive users into retail locations — but only during the hours that the retail location is open.

Bricks-and-mortar companies will also benefit from another element — the ability to bid differently on different geographies within the same campaign. For example, a coffee shop might want to bid higher for potential mobile customers within a mile of the establishment, a little lower for those within five miles, and even lower for those further away.

Reporting on sitelinks will also be available at a more granular level. Marketers will be able to see performance data for each individual sitelink, and fine tune accordingly. Additionally, each sitelink within a set will be approved individually; so, if 5 sitelinks were submitted and only 4 approved, the approved ones could go ahead and run.

One key for these upgraded extensions — to use them now (as soon as your account gets the upgrade) you need to create an enhanced campaign and then click the Ad Extensions tab to create the extensions. If you do it in any other way, you won’t get the upgraded functionality.

The Bad Stuff

It’s not surprising that the main concern from marketers about the change is a fear of the lack of control. As with many recent updates, Google seems to be trying to make things easier and simpler — especially for smaller marketers — and, in the process, the company sometimes ditches some of the fine-tuning capabilities that more sophisticated marketers are taking advantage of.

“This is an example of Google deciding what is best for the advertiser. However, in this case they’re not just opting you into a setting by default, they’re removing the option of opting out,” iProspect’s Hull said.

The biggest and most important gripe is the grouping of tablets with desktops for bidding purposes. This tablet/desktop bid is the “default” bid, and the smartphone bid can be a (positive or negative) multiplier of that. This effectively will bring to an end some of the bargains that marketers were getting on tablet traffic, boosting Google’s revenues in the process.

“By lumping the higher performing tablet traffic in with desktop traffic, RPS (revenue-per-search) will increase for Google as CPCs increase on the combined desktop and tablet traffic. This, presumably, will address Google’s mobile monetization gap as an increasing share of searches is coming from tablets and smartphones,” Adobe’s Bill Mungovan writes in a blog post.

Susan Waldes, senior client services manager at PPC Associates, agrees, saying, “Though search behavior and click behavior is pretty similar per device [desktop and tablet], the types of conversion actions completed vary immensely. A quick email capture on tablet is similar, but what if you are pushing a software download as your conversion action? Does this mean you can’t opt out of tablets altogether?”

Indeed, it appears that you can’t opt out of tablets, nor can you opt out of desktops. There’s no way to conduct a mobile-only campaign. Though some speculated that one might get around this by bidding, say, a penny for desktop/tablet and multiplying that for mobile, marketers are limited on mobile. They can multiply by -100%, or in the range between -90% and +300%. That means someone would only be able to bid up to $3.00 if desktop/tablet was bid at a penny. Great, if that works for you. If not, you’re out of luck. (With other parameters, like locations, days, times, and any ad group-level targeting methods, the acceptable multiplier range is between -90% and +900%.)

What To Do

The bottom line, whether you like the changes or not, is that transitioning to the new campaign structure is going to take work — lots of work.

First, there’s the need to develop new best practices for structuring accounts and campaigns, as well as coming up with creatives. And, third-party tool makers will be doing a lot of programming. Keith Wilson, VP of marketing strategy for the Search Agency puts it like this:

[Our company] anticipates evolving account structure best practices, which are the FOUNDATION for driving search performance. Technology and tool providers will also need to adjust data schemes to extract performance by creative targeting settings on their backend. Additionally, creative teams will have to evolve best practices for advanced targeting and performance measurement using new data points not previously available.

Of course, beyond the planning work will be the actual inputting of new campaigns and combining of desktop and mobile campaigns into a single campaign — no simple task.

Google says it’s stepping up education and support to help marketers cope with the changes. It has developed an “upgrade guide” PDF and is planning a series of webinars. More blog posts are also forthcoming, and support personnel will be on duty, as well.

Of course, some marketers are opting to sit back, do some research, and wait while others explore the new features and report on their successes and failures. The automatic conversion of campaigns is still a few months off, after all.

Hopes For the Next Release

If you’re a product developer, all the complaints could be thought of as “feature requests.” For example, Google says things like optimization for the new conversion types are already in the works.

Mark Ballard of RKG is advocating for more granular device data. “We love to dig into our performance data to find those niche segments that perform differently and then act upon that information,” he said. “iPad users are different from Android tablet users and we see that in the numbers. Unfortunately, it looks like we will not have that level of control or some of the other functionality we’d like to have with the initial launch of Enhanced Campaigns.”

The ability to break out tablets and desktop would likely be another frequent request. And, more will certainly be forthcoming as marketers get their hands on the new interface and discover the capabilities — and limitations — of the new Enhanced Campaigns.

“None of IAC’s companies prey on any unsuspecting users and we are fully compliant with Google’s standards and policies,” Justine Sacco, the director of corporate communications for IAC, told me.

Mindspark offers users free toolbars such as “Daily Bible Guide,” “Guffins,” and “Television Fanatic.” Once the toolbars are installed, any searches go through MyWebSearch.com, and the company shares revenue with Google when users click on the ads.

IAC’s comments come at a time when Google is stepping up the enforcement of new policies it established in September of last year, extending them to larger partners with which it has special deals. Critics of IAC like Ben Edelman — who recently wrote up a report accusing IAC’s toolbar business of shady behavior — believe that “fair enforcement” of Google’s policies would put a stop to current practices. (He notes, however, that some of the research for his report was done on behalf of an unnamed client, which may have an anti-IAC agenda.)

There’s certainly some room for interpretation with at least some of Google’s new software policies. Take the one that says, “At the time of installation or download, users must clearly understand the principal and significant functions of the software and the specific effects the software will have on their computers. This may be supplemented by ‘Learn More’ links.”

What exactly do average users — especially the less tech-savvy — need to have spelled out before they “clearly understand” what they’re doing when they download a toolbar? It’s not an easy question to answer.

Google definitely expects some of its partners to go away, or at least generate less revenue when they change their software to be compliant with the new policies. In the recent fourth quarter earnings call, SVP Nikesh Arora said  Google was already seeing some shakeout from the changes:

[We] updated our policies for better enforcement. And that has resulted in higher quality results for end users; it has reduced in some cases the monetization that some of our partners are seeing as a result of this enforcement and hence you are seeing the impact on the numbers.

We just announced this policy sometime early this quarter, in the past quarter that we just went through, so you are going to see the impact over the next few quarters. We’ve also implemented more stringent policies around downloadable apps, and that’s why I think both those effects are going to stay with us for the year, but we think in the long-term is the right answer for us, it’s the right answer for users and it’s right answer for advertisers, so we think it’s a good thing to do.

Policeman stock image used with permission from Shutterstock. 

Search toolbars are big business for security software company AVG and media company IAC. But could revenue from these toolbars be in danger, as Google says it is stepping up enforcement of its policies against shady behavior related to toolbar downloads?

IAC’s Mindspark makes substantial revenues through search toolbars, and AVG, in September 2011, said it had made about 20% of its revenues (or around $40 million) from Yahoo and Google combined that year to date. People install these toolbars for the promise of security or entertainment. Then, when they conduct searches, they get back organic results and ads that are powered on the backend by Google (and Yahoo, in the case of AVG). The toolbar vendor and the search company both share in the revenue off ad clicks. AVG just renewed its deal with Google in November 2012, and partnered with Yahoo in December. Meanwhile, IAC’s latest renewal with Google was in April of 2011, and the pact covers the two companies’ relationship until 2016.

Last September, Google announced that it had new “software principles” designed to fight a common complaint with search toolbars: that consumers are uncertain how they got installed on their computers in the first place, that they don’t like the often ad-heavy search results they generate or that it’s hard to get them removed.

Despite this, a recent post by privacy advocate Ben Edelman accuses Google partner IAC of preying on unsuspecting users. Such behavior, if true, doesn’t seem to mesh with Google’s standards. (This isn’t the first time IAC has been accused of getting away with violating Google policies.) Meanwhile, a post on Seeking Alpha by hedge fund manager Eiad Asbah highlights issues with AVG. That post also suggested that a new crackdown would happen, and postulated that the Yahoo relationship was meant to protect AVG if problems arose with Google.

We reached out to Google, which declined to comment on either company but which did suggest that greater enforcement, hinted at in the Seeking Alpha post, would be coming:

 While we can’t comment on individual customers, we recently announced that we are updating our ads policies and stepping up enforcement in order to ensure that users have a safe, trustworthy experience online [….]

This included reworking our AdWords policy governing Software Principles to ensure that users are given important information before downloading software on their computers and that the software is not harmful or hard-to-uninstall.

We’ve now started to extend updated requirements to those AdSense partners who negotiate individual agreements with Google.

AVG recently signed search contracts with Google and Yahoo, and we are continuing to work closely with them as a strategic partner on numerous fronts. AVG wants to ensure that peoples’ online experiences are transparent and safe. While search makes up a portion of our business, we are first and foremost a security and privacy company and are very aligned with Google in their efforts to make the web a better and safer place.

Perion was asked to make the changes, which come into force Feb. 1, to guarantee “transparency,” [Perion CEO Josef] Mandelbaum said.

We’ve always had a policy. The policy has been that we want to make sure that whatever ads are presented in whatever way our traffic is routed to ads, it is done in the best interest of the user, and we began to notice that they were sites and pages where we had too many ads in a page, so it became more restrictive and updated our policies for better enforcement. And that has resulted in higher quality results for end users; it has reduced in some cases the monetization that some of our partners are seeing as a result of this enforcement and hence you are seeing the impact on the numbers.

We just announced this policy sometime early this quarter, in the past quarter that we just went through, so you are going to see the impact over the next few quarters. We’ve also implemented more stringent policies around downloadable apps, and that’s why I think both those effects are going to stay with us for the year, but we think in the long-term is the right answer for us, it’s the right answer for users and it’s right answer for advertisers, so we think it’s a good thing to do.

AVG’s logo and description for Secure Search

Many consumer advocates would likely applaud Google’s changes, given the amount of consumer confusion around downloading some toolbar apps, and how to uninstall them. Just doing some cursory searches, I found many instances of frustrated consumers complaining about their attempts to uninstall the AVG Safe Search toolbar.

Comments about AVG on Ripoff Report

Mindspark’s toolbars come in for a lot of criticism as well, with one computer service company accusing the IAC subsidiary of using the bible to trick Christians into downloading “malware.” This because one of Mindspark’s toolbars is called Daily Bible Guide. Others, as Edelman notes in his report, seem to be targeted specifically at kids, such as Guffins, which offers virtual pets.

How Mindspark advertises Guffins on Google

Just as search ad technology companies were forced to make a decision about changing their products or falling out of favor with Google and losing their AdWords API key, these toolbar makers would seem to be facing a turning point. Either they need to change their ways — and become much more transparent and easy to use — or they’ll apparently need to look elsewhere for ads.

Police officer image used by permission of Shutterstock. 

The fourth quarter average CPC was still down — approximately 6% — as compared to the same period last year, but, given recent quarters, any upward movement in CPC is noteworthy. A recent report from Adobe indicated that the company’s paid search division saw a CPC rise in Q4.

The company has reported declining CPCs — save a 2Q 2012 1% rise over the first quarter — since the third quarter of 2011.

Google has managed to keep revenues high, however, by growing the number of paid clicks. Aggregate paid clicks, across both Google and partner sites, grew 24% year-over-year and came in 9% higher than the previous quarter.

Of interest, especially to network partners, is the amount of advertising revenues paid out to those other publishers, or traffic acquisition costs. In the fourth quarter, Google said, this totaled $3.08 billion, or 25% of what Google brought in from advertising. Those partner sites helped Google generate revenues of $3.44 billion, or 27% of total revenues. That’s grown 19% since the fourth quarter last year.

Google-owned sites brought in 67% of total revenue, or $8.64 billion. This figure was up 18% over the year-ago number.

Other revenues came in at $829 million, or 6% of total Google revenues. Last year, the company only made “other revenues” of $410 million, so it’s grown that part of the business 102%.

Google has confirmed a bug that causes conversions from Google Analytics to not be imported into AdWords properly, which can cause issues with any campaigns using this data for optimization. The bug has been reported by posters at WebmasterWorld and discussed at Search Engine Roundtable, with some posters saying they noticed the problem begin as early as January 6.

Says a Google spokesperson:

We’ve recently been experiencing a technical issue affecting a small number of advertisers who are importing engagement-based Google Analytics goals into AdWords, such as page depth and time on site. Advertisers who are importing URL-based goals into AdWords, like a visit to an order confirmation page, have not been affected. Our engineering teams are working on a fix and we’ll provide an update when it’s available.

The spokesperson confirmed that advertisers using Google’s automated bid optimization tools based on these engagement goals could be affected. The effect would be lowered bids and reduced traffic, because AdWords isn’t aware that conversions are actually taking place.

For the time being, some marketers suggest affected advertisers switch their CPA campaigns to CPC until Google resolves the issue, and the tools have the correct data to make optimization decisions. The company hasn’t given an estimated time for the fix to be complete.

Adobe came to its conclusions after looking at paid search spend across more than 2 billion impressions by its clients in the fourth quarter. Adobe’s Media Optimizer unit came from the company’s acquisition of paid-search-specific company Efficient Frontier.

Paid search as a whole had a good holiday season, Adobe found, with spend by online retailers up 16% year-over-year. Last year, the rise from fourth quarter 2011 to 2012 was just 13%.

Google saw its market share rise to 86.5% percent, up from 85.9% in Q4 2011. This increase was directly related to the opportunities for marketers — mobile traffic and the creation and growth of product listings ads.

Adobe researchers have found that mobile traffic is growing much more quickly than expected. Mobile, including both smartphones and tablets, now represents 20% of spend and impressions in paid search — double the amount of traffic from a year ago.

Some of that is due to what Sid Shah, director of business analytics at Adobe, calls the Christmas Effect — when people open up holiday gifts of new tablets. “What’s really interesting,” said Shah, “is that on Christmas Day and Christmas Eve mobile traffic spikes up and remains high for the entire holiday period. We see a very similar trend globally.” By the end of next year, Shah expects mobile devices to account for 30 to 35% of paid search traffic, with a good amount of that growth occurring between Christmas and the end of the year, when new tablets and smartphones are unwrapped.

Though traffic has been high and conversion rates on tablets have been high, these tablet-targeted campaigns have benefited from a 30% lower CPC than desktop campaigns, meaning they resulted in a 73% higher ROI. That changed slightly in Q4, as marketers began to see the opportunity and bid higher on tablets. During that period, Adobe found, tablet CPCs were only 16% lower than desktops. Still, with higher conversion rates, tablets represent an opportunity.

Shah notes that many marketers may be targeting tablets or smartphones, but aren’t necessarily ensuring that their campaigns are optimized for mobile — with mobile-specific creative and landing pages — and doing so, or at least testing this approach, would be worthwhile.

Likewise, product listing ads — which now represent all of Google Shopping results — were a major factor this holiday season. Adobe found that PLAs accounted for 10.7% of overall paid search spend in Q4. By contrast, Bing’s whole paid search program represented only 13.8% of retail ad spend.

Adobe noticed some interesting trends around PLAs as compared to regular paid search ads. PLAs have a 34% higher CTR than non-PLA ads, which makes sense given the larger space and image afforded to the PLAs. However, the average order value for PLA ads is 12% lower than standard ads. Shah believes this is because users looking at PLAs, especially on Google Shopping, could be more price-sensitive, using the ads to do price comparison. Those clicking on non-PLA ads could be impulse buyers who aren’t shopping around as aggressively.

Additionally, Shah told me that non-PLA ads often benefit from a lift caused by view-throughs of PLA ads. In other words, people see a PLA ad for a certain brand or product, and then, as they continue searching, they later click on a regular text ad. “Fifteen to twenty percent of all clicks that begin with a PLA ad end with a non-PLA ad,” Shah said. With regular paid search ads, there’s only a 5 to 10% lift effect.

Though PLAs are now priced rationally, as compared to paid text ads, Shah suggests that making PLAs more granular — making them for more products in more categories — is an opportunity for advertisers. Additionally, he believes getting the team working on PLAs collaborating with the paid search group — if they aren’t already — could bring marketers more value. Additionally, investing in technology that allows for more precise attribution could enable marketers to track and capitalize on the lift effect.

The rule-breaking was spotted by SEER Interactive’s Francis Shovlin, who noticed some pretty blatant examples on ads for certain search terms, and wrote about it on the company’s blog. Marketing Land has been able to replicate some, but not all, of what Shovlin described.

Search for “adwords,” for example, and the top result is — unsurprisingly — a Google ad for its AdWords program. Sitelinks underneath seem to link to specific pages where users can “Lean How to Advertise on Google” or the “Benefits of Google AdWords” or about “Costs and Payment.”

In fact, all of those links lead to nearly the same page — the only difference between the destinations being that a different tab, below the fold, is open for each link. Meanwhile, Google’s own guidelines say “Tabs on the same page count as the same page” and “We recommend that 80% of the content on a page be unique for that page to count as a different page.”

Google in September announced it would start more aggressively pursuing violators of the duplicate sitelinks policy, but it apparently hasn’t investigated its own ads.

SEER Interactive also noticed sitelinks that included a phone number, also a violation of Google policy, but Marketing Land wasn’t able to replicate that result.

An additional query for “google adwords express” was riddled with a similar problem, with all sitelinks going to the same landing page. In that case, there aren’t even different tabs on the landing page.

We have an inquiry out to Google about the issues raised here but haven’t yet heard back. We’ll update this story if/when we hear back.

UPDATE: I’ve just heard from a Google spokesperson who provided this statement: ”We’re reviewing these campaigns and making any adjustments necessary to ensure they’re compliant with our ads policies.”

The new ad format, which can collect information like demographics, email addresses or phone numbers, is called Cost Per Lead for Search. It’s clearly marked as “Ad from” with the advertiser’s name following.

Advertisers can choose a headline, logo and up to six individual fields for users to fill out. The “thank you” text that appears after users complete the form can also be customized.

The Cost Per Lead for Search ads are already appearing for online dating site Match.com:

In the Match.com example, once a user submits the information and gets the thank you message, a new tab is opened up automatically so the person can finish filling out their online dating profile.

Yahoo says it will verify all submitted user data so advertisers pay only for legitimate leads. The company didn’t elaborate on minimums or costs but said pricing will vary by product or service.

Rather than an auction-based process, prices will be set via advertiser size and vertical, a Yahoo spokesperson told me. Only one such ad will appear per SERP, and if two advertisers are eligible, the higher-ranked one will be shown. Rather than being targeted by keyword, the ads appear every time the organic result shows up — the ad doesn’t change the ranking, just “annotates” the organic listing.

Yahoo gets its organic search, and many paid listings, via its relationship with Bing Advertising. The company handles relationships with larger advertisers itself,however, and says marketers interested in the new ad format should contact their sales representative.

The closest we’ve seen to this ad unit in search is a cost-per-lead AdWords format that Google launched earlier this year. This is the first new search-related ad unit released by Yahoo in quite some time, and comes under the fairly new leadership of former Googler Marissa Mayer.