Google May Need To Modify Keyword Policy To Attract More Brand Dollars

Google wants to attract more brand advertising dollars in search. However, it also allows marketers to bid on trademarked or branded terms they don’t own or control so long as those keywords are not part of the ad copy. This practice so far passes legal muster in the US (although there’s ongoing litigation). Google recently modified its keyword bidding policies in the UK and introduced this more liberal approach to make the US and UK policies mirror one another.

British brands have threated to sue Google over the changes.

The Wall Street Journal reports on the fact that many big companies in the US are upset that Google allows keyword bidding on brand terms by competitors and third parties:

Last August, American Airlines filed a suit against Google in federal court in Fort Worth, Texas, seeking restitution for damages caused by trademark infringement on the search engine. The airline is asking Google to stop selling its trademarked terms to other advertisers. This practice is “utilizing our brand that we’ve built for more than 80 years for the benefit of someone else,” says American Airlines spokesman Billy Sanez.

There’s an interesting “Catch 22″ for both sides here. Google may need to modify its keyword bidding policy to attract and appeal to more brand advertisers, though its current policy may be technically legal. However, brand advertisers that don’t have a strong organic presence may be compelled to still participate in AdWords, regardless. That’s because there’s a clear brand impact from top placement in search results (paid and organic). So the brands that fail to capture one of these top spots may suffer in the long run.

Google will be reluctant to change its policy but wants the branding dollars in paid search. Brands want the exposure but don’t want to participate in a system that may adversely impact their most valued asset.

The question is: who will blink?