Tiff over ‘Deceptive’ Search Keywords May Spark Web Crisis

Written by Evan Schuman
October 24th, 2005

When Office Depot sued Staples last week over search engine keyword purchases, it touched on more than marketing strategies.

The suit could force the discussion of the ethics of Web advertising tactics, a discussion that many in the industry would rather not have.

The particulars of the lawsuit are not that exciting. Office Depot accused Staples of deceptive advertising practices for having bought search terms that include the name of an Office Depot subsidiary.

Actually, both sides of the lawsuit filed in the U.S. District Court in West Palm Beach, Fla., involve subsidiaries. Office Depot’s subsidiary, Viking Office Products Inc., accuses Staples’ subsidiary, Quill Corp., of trying to lure away Viking customers.

The accusation is that Quill was implying things about the long-term prospects for Viking to which Viking/Office Depot took exception.

But the implications for the Web revolve around the way Staples/Quill was accused of poaching customers. Staples/Quill apparently purchased keywords from Google that would cause Staples/Quill links to come up when people typed in terms such as “Viking” when searching for the Office Depot subsidiary.

Why is this potentially such a big deal? Search engines?from Google, Yahoo, LookSmart, and many others?are the Web’s next big shot at a sustainable business model. The first shot was banner ads, which is still a bumpy road.

But this isn’t of interest solely to companies with search engines that need to generate revenue. Tons of retailers use keyword purchases as a major part of their marketing strategy.

The ability to influence where on the listings you appear is crucial. Even more at issue is getting your message to appear when potential customers are searching for specific things, even your competitors’ names.

But the advertising is typically not direct. It’s most effective when used to let people know about an option that they probably haven’t thought of when typing that search term. Microsoft wouldn’t pay for the key words “Windows operating system” any more than ExxonMobil would pay for “gasoline.” Years of traditional advertising have already made those companies obvious choices for those terms.

For the same reason, a vendor is unlikely to buy its own name. If a sales prospect knows enough to type in “the Smith-Johnson Furniture Bonanza,” we can assume he or she has already thought of Smith-Johnson. But that prospect might not have considered Smith-Johnson’s arch-rival Miller-Jones Furniture Festival, so Miller-Jones likely would want to purchase “Smith-Johnson.”

That leaves companies buying keywords to get themselves known in areas or situations where they are not top-of-mind. That means buying search terms that people will likely use when they are searching for your competition. Hence, the importance of the Office Depot/Staples tiff.

The Office Depot action may end up being a non-issue if the court focuses solely on the ad’s content and whether it’s deceptive on its own. But if the trial starts questioning whether it is inherently unethical to buy the name of your competition as your own ad keyword, things could get interesting.

In the early days, courts came down hard against Web squatters, who would register well-known names and then wait around for those companies (or celebrities) to try and register those domains so they could hold the names for ransom.

The courts pretty much concluded that Web squatting was inherently unethical as the registrant had no legitimate business interest in those names other than extortion. Given that I am based in New Jersey, I could probably make an effective argument that extortion is a legitimate business, but let’s leave that for another column.

What if the courts took a similar stance with keywording rivals? What if they ruled that the only purpose of registering a rival’s name is to deceive prospects?

I personally think that if Barnes & Noble wanted to buy the name “Amazon” and show an ad that said “70 percent lower prices than at Amazon?guaranteed?this week only,” that wouldn’t be at all misleading.

It happens on eBay all the time. A watch vendor, for example, might use the phrase “NOT TIMEX OR BULOVA” in the headline for cheapo watches, thereby honestly describing the merchandise and making sure the ad gets pulled up when customers search for better-known brands.

There’s a potentially bigger issue, though: credibility. Google has done a quite respectable job of keeping its results clean, but as pressure builds, will buyers fear that search results are rigged? If so, will that ultimately open the way for a stricter set of ethics rules for search engines?

Debates that speak to long-term impact and ethics are rarely comfortable. Then again, when the Web was young, neither were discussions of profitability.


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