McDonough School of Business
News Story

Search and Annoy

When web users search for brand names, the results often include competitors
By Bob Woods
Photo by Drake Sorey

Shopping for a new pair of jeans? Making airline reservations? If you are like most modern consumers, you simply type a few keywords into a search engine, and up pops a long list of choices. Click the link at the top of the list, and it will take you to the product’s website. Or not.

It turns out that online consumers don’t always land exactly where they intend. The reason, according to researchers at the McDonough School of Business, lies in sales tactics employed by the multibillion-dollar advertising industry, which is the lifeblood of search companies. The findings are revealed in a Trademark Reporter study, “Using Trademarks as Keywords: Empirical Evidence of Confusion,” conducted by Ronald Goodstein, associate professor of marketing, and Gary Bamossy, clinical professor of marketing, and published last year in Trademark Reporter.

These ads are confusing to consumers. They think they’re getting one company but are actually getting someone else.”
—Ronald Goodstein, Associate Professor of Marketing

“Search engine providers are able to present users with search results that are not always optimized to provide the ‘best’ information to consumers, but are calibrated instead to maximize revenue for the search engine company,” the study states. The problem is that Google, for example, sells keywords to advertisers that include generic words and phrases, as well as ones trademarked by competing compa-nies. So if you search for “Levi’s,” your results might begin with ads for competitors such as Wrangler and Lee.

“These ads are confusing to consumers,” Goodstein says. “They think they’re getting one company but are actually getting someone else.” Goodstein’s research found that when people type a specific brand name into a search engine, 75 percent of them are looking for that particular product. “The fact is that you’re not allowed to confuse consumers,” he says, referring to long-established Federal Trade Com-mission regulations and court rulings.

According to trademark law, Google and other search engines are in the wrong, the study purports, be-cause they make money selling branded names to advertisers who don’t own them. The search compa-nies cause even more harm by diluting the brand equity that companies have invested in to build. “To display other brands in search engine results … hurts both the sales and equity of the trademark own-er,” the study says.

The search companies argue that they’re simply providing more information, which is good for the con-sumer, and have no vested interest in the consumer’s purchase decision. Goodstein says his empirical research proves otherwise. The search companies get paid for click-throughs and purchases, “so they actually do have a vested interest,” he says.

Goodstein decided to dive into this controversial issue while participating as an expert witness in a law-suit brought by an airline against a search company. “There’s been a debate in the marketing area about this for a long time, and the courts aren’t sure how to rule because it’s new to them,” he says, not-ing that most cases, including the one he participated in, are dismissed or settled out of court without establishing a legal precedent. “It’s still determined on a case-by-case basis.”

The search companies have altered the way they display “sponsored ads” on search results, yet Good-stein suggests that the changes aren’t enough and continue to confuse consumers. In the meantime, owners of trademarked brands can do little to avoid harm beyond filing a lawsuit. “They have to decide, though, if it’s worth going to court over this,” he says. “The search engines have deeper pockets than they do.”

Published in Georgetown Business magazine, Spring 2016