So we are now into our first week of the new regime. Google is now allowing UK advertisers to bid on trademark-protected keywords. Although there might be a few teething troubles, it is definitely up and running.

Last week one of our clients (who sells, among other things, a CD and DVD that includes performances from a number of high-profile artists) had a campaign ready to go with keywords including “famous artist” whose name is a trademark. Before the weekend, those ads were not running due to “trademark restrictions” but this morning, they are displaying fine. The teething troubles I have seen include there still being warnings in the account that keywords include trademarked terms and hence are not triggering adverts - so the warning messages appear to be a bit behind the times compared to the actual ad display mechanism.

This policy change has broken out into the mainstream media - with coverage in at least The Times on Saturday (no quote for Distilled, unfortunately). They covered an angle that I thought was quite interesting. Tesco have apparently come out to say that they do not intend to bid on their competitors’ trademarked terms - quoted in The Times as them “taking the moral high ground”:

The move is already unsettling some big-name advertisers, with Tesco pledging to take the “moral high ground” and not bid against rival brands on Google…

I’m not sure it’s anything of the sort.

Morality when it suits

The largest players in the online world have huge volumes of what is known as branded search - i.e. people looking for them by name and including their (normally trademarked) business names in the search query. An example would be searching apple store before buying a computer online directly from Apple.

The largest names in the business typically have the largest volumes of branded search. Their smaller competitors have much fewer people searching for them directly (unsurprisingly). With Tesco being one of the largest brands in the UK, they must be right at the top of the tree in terms of volume of branded search.

If Tesco can persuade their competitors that the “moral high ground” includes not bidding on each others’ trademarks, they will definitely come off best. They will lose a relatively small opportunity, while their competitors lose much bigger opportunities.

Note that the legal situation is not completely cleared up yet - Google may yet face legal challenges (as reported by Channel 4).

The gender balance has got a little testosterone heavy in the office with our new recruits taking the head count to 6 guys and 3 gals. So I thought a thoroughly gal-orientated blog post might help level the hormones.

With the sun’s summer debut last weekend it was time for my ’spring clean’ (as it were) and, what with one thing and another, I realised Reputation Management is much like a beauty regime…

Preventative
Cleanse, tone and moisturise. Rinse and repeat as necessary. Much like those crucial preventative or preparatory steps, reputation management is best achieved when tackled in advance. Building up your positive content can act as a buffer if anything negative happens, just like that skin care mantra can keep you looking resplendent even if you indulge in one too many Cornetto ice creams.

Break-out
Yikes! Break-out! You wake up, look in the mirror and realise something has gone very very wrong. Maybe you’ve actively done something bad (left the hair dye on far too long; distributed exploding laptops), maybe you’ve missed a crucial step of the preventative stage (passed out with your make-up on again; failed to create any positive content), maybe you’ve done everything right and it’s still gone horribly, horribly wrong (hormones; pissed off ex-employee).

What to do? The knee-jerk reaction is to cover-up, but this is often the worst choice of solution. So you’ve dyed your hair pink by mistake? Style it out: re-dying or a hat that covers all may seem appealing but you’ll fool no-one. The same rule applies for reputation management. If you face the problem head on and don’t try to fool anyone, you’re much more likely to come out with at least some of your reputation intact.

Recovery
Ok, the worst of it is under control. The recovery stages are simple: deal with the problem and fix it if you can. Then return to those preventative steps and work at them until all the bad stuff either gets better or disappears.

Now, what have we learnt? No prep + negative stuff = trouble. And, because a flare-up can happen anytime, anywhere, the only constant is the preparation.

Also, if you get yourself sorted, you can afford to take risks- how would you know pink wasn’t your colour if you didn’t try it? But these actions have to be supported with something to fall back on. Great eyebrows and well-applied lipstick could take a lot of the attention away from your hair, just as a kick-ass set of online profiles and some independent positive content can keep your rep lookin’ rosy!

I am not an economist, so I don’t know a lot about Giffen goods, but the quick write-up at Datawocky asking whether search marketing is a Giffen good explains the concept of a good where demand increases as prices increases:

The classic example is staple foods such as rice, wheat, and potatoes. As their price goes up, poor people on a tight budget actually consume more of them, because they are forced to cut back on luxuries such as meat, but still need the same number of calories to survive.

Two technical points spring to mind:

1. This only works when the market price of the good increases - a single supplier can’t expect to raise their prices and gather increased demand as would happen with regular price elasticity (in the rice example given, one rice supplier can’t increase their price and gather increased demand - it needs to be a market price rise)
2. It relies on there being a more expensive substitute (or near-substitute) as in the meat vs. staple grains example.

Datawocky argues that this could apply to search marketing (i.e. paid search):

In an economic downturn, companies get more cautious with their marketing budgets, moving more dollars into measurable and direct channels such as search advertising while cutting back on less-measurable brand advertising. Thus, there is more competition for the clicks, driving up the price (cost-per-click, or CPC) of search ads.

(The model is slightly different because the auction pricing model actually causes the price increase in this example).

Applied to search marketing this basically means (a) it is in Google’s hands (at least in the UK, with their crazy market share) and certainly not in agencies’ hands and (b) it has to stay cheaper than alternatives such as offline advertising for driving immediate sales.

What happens to Giffen goods in a monopoly situation?

If there is only one supplier of rice, and demand for rice increases as the price increases towards the price of meat, then that supplier has absolutely no incentive not to immediately increase the price to just below the price of meat.

Applied to paid search, does this mean that we will see new measures from Google aimed at increasing cost per click? As long as the price stays less than other forms of advertising per conversion, the theory says that demand should increase as they increase the price up to that point…..

Food for thought.