Tesco takes moral stand against Google Awords?

Jonathan Bowers, May 9th 2008, 11:19AM

UK supermarket titan Tesco has announced that it is not bidding on rivals’ names despite the introduction of Google Adwords changes. If true what are Tesco’s motivations?

Immediate reactions have been that Tesco does not want to dance to Google’s tune and that the move is designed to keep the cost of search engine advertising down. And Tesco would not be the only company in the UK commercial sector showing defiance to the US goliath.

Or does Tesco have something else on its mind. Naturally, if it appears to take the moral high ground and does not bid on names such as Sainsbury’s or Asda, it will want them to do the same. Just maybe, the market leader’s concerns of rivals diverting its intended online customer base are the real motivation.

This falls in line with Asda’s belief. According to Brand Republic , Rick Bendel, marketing director at Asda, said: 'Tesco believes everything is for sale, except when it doesn't suit it.' This supports the view that Tesco thinks it will ultimately lose out from the adoption of Adword changes and is trying to manoeuvre to prevent it. However, Asda is not playing ball as it has not ruled out bidding on rival trademarks.

Search engine traffic diversion has become a major issue. The new rules allow companies to bid on rivals’ trademarks for the first time. While advertisers are not allowed to pass themselves off as their competitors, they can now appear quoting their own URL at the top of a search for a rival if they are the top Adwords bidders.

For example, a searcher who wants to do some online grocery shopping puts Tesco in as their search criteria. Asda has top bid on the Adword ‘Tesco’, so its advert appears top of the Google search list. This online shopper just wants groceries and is happy to click on the first link. The searcher looked for Tesco but ended up shopping with Asda. Tesco has lost out despite being the initial front runner.

It is surprising that Tesco would be that concerned about a price war on Adwords. It is the dominant supermarket in the UK and most likely to have the resources to win an Adwords price battle. However, as it operates in a convenience retail sector where customers are likely to opt for the path of least resistance, the possibility that Google’s new Adwords system will divert custom away is a serious concern.

This is also backed up by brand new research suggesting that under the new system search engine users get to their original search destination 8% less often compared to the old system.

I believe that Tesco’s true concern with Google’s new rules is not that it will have to spend more but that its competitors will now profit from piggybacking on its hard fought brand positioning.

Tags: adwords, brand, e-commerce, google, search_terms
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Google now the top global brand

Jonathan Bowers, April 28th 2008, 12:23PM

Google is once again the biggest brand in the world, well according to one report at least. Admittedly, the said report is from highly respected market research agency Millward Brown and it has the online search engine titan as top dog in the corporate branding stakes for the second year running.

The new Millward Brown list of top 100 brands is once again dominated by technology companies with 6 of the top 10 coming from the IT field. However, previous brand king Microsoft has fallen to third to leave Google as the undisputed brand leader. Or has it, according to an alternative list by Interbrand Google ranked only 20th in 2007.

The discrepancy seems to be down to just how rapidly the Google brand is growing. While the Interbrand 2007 list has Google in 20th place it also says the brand had grown by 44% over the previous 12 months, a figure that blows all of the other top 100 brands out of the water. It is therefore perhaps understandable that a year on Google would be the top brand worldwide.

The Millward Brown list is compiled by evaluating both tangible financials and intangible customer opinion. In terms of the tangibles, Google certainly made big waves last year. Profits were up 40% to $4.2 billion in 2007.

Meanwhile, what about the intangibles? Well ask a random person on the street to name an online search engine and chances are they will say Google. Similarly, ask them to describe the Google logo and, again, the likelihood is they can.

It certainly seems Google is king at the moment. Its impressive profits, extremely recognisable profile and market sector dominance undoubtedly makes it the Tiger Woods of brands.

Meanwhile, looking just at the UK sector, Vodafone has taken over as the top British brand and in doing so has provided a useful example that brand success and profits are not necessarily mutual. In fact, ironically Vodafone's bottom line has taken a bit of a beating lately partly because it has been pursuing an aggressive acquisition policy to expand its brand strength globally. Time will tell if boosting its brand will work for Vodafone.

Also of interest is the continued recovery of Marks & Spencer. The British retailer has had an iconic brand for a long time, however its value has fluctuated a great deal in the last few years. Happy for it, the brand is looking in good shape again as M&S is the top British retail brand and the fourth highest overall.

The recover has been multipronged. To rebuild its reputation M&S has revamped its stores, refocused on core product lines and, of course, delivered a highly successful ad campaign that reports suggest brought in £2.5 for every £1 spent. Other successful strategies included a remodelling of the company website, which resulted in a 78% increase in online Christmas sales last year. The morale of the M&S story seems to be: keep it fresh and current.

Tags: adwords, brand, google, internet, search_terms
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Yahoo too proud for Microsoft's advances

Jonathan Bowers, April 18th 2008, 4:07PM

What is it about Microsoft that it seems no one wants to play with them? The global computing giant has issued an unsolicited $43 billion offer to buy Yahoo but the online portal seems to be willing to do almost anything to avoid getting into bed with Microsoft.

The logic of the move is clear to me: by teaming up both Yahoo and Microsoft can, for the first time, realistically take on search engine leader Google. This is a strategic view that I'm sure is appreciated throughout the IT community with the exception of Yahoo's senior management it seems.

In fact Yahoo's tactics appear to be to go the opposite way completely, by teaming up with Google in a deal that can surely only strengthen the search engine king's grip on its throne. Yahoo has agreed to enter a trial of using Google AdSense, which will deliver relevant Google ads alongside Yahoo's own search results. Yahoo is also reportedly in talks to take over Time Warner's AOL internet assets. All this, it seems, to thwart Microsoft.

But why? Is it because Yahoo is fiercely independent? Or is it just fiercely opposed to being bought by Microsoft? Either way I believe that Yahoo has its sense of who is its biggest competition badly skewed.

By partnering up with Microsoft, Yahoo would have the ability to take on Google for the status of the largest online search portal worldwide (and the financial prizes that come with it). Instead, by teaming with Google and taking on its technology, Yahoo is effectively announcing that Google is better. This amounts to Google standing on the summit of Mount Internet Search Engine and then Yahoo handing it a Yahoo branded box to stand on.

Yahoo would no doubt argue that it is not just a search portal and that being number one in that regard is not the be-all and end-all. It may even add that a tie-up with Google will help drive traffic to its other portal services thus strengthening its overall standing. However, for me, it seems as though business sense has given way to good old-fashioned pride. Yahoo likes being a big fish in its own pond and it does not want to be a small fish in Microsoft's vast silicone sea!

And meanwhile, everyone else with a vested interest in the internet, from managed hosting providers to mortgage advisors , lose out. Google is already starting to throw its weight around by changing its Adword rules to glean higher profits and now Yahoo has demonstrated that it is safe to continue its anticompetitive policies.

Tags: adwords, google, internet, search, search_terms
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Google devalues trademarks with Adwords changes

Jonathan Bowers, April 11th 2008, 12:25PM

May 5th is set to be a watershed date in the UK internet arena but unfortunately not for a good reason in my opinion. Internet search goliath Google will be fundamentally changing its search engine paid ranking rules to bring them in line with its North American policy and the UK business community is not happy.

Google intends to allow open keyword bidding on trademarked terms for the first time in the UK, a move that will effectively allow any company to gatecrash the pay-per-click efforts of others under what I would consider false pretences.

Basically, the outgoing system ensures that if a searcher includes a trademarked term anywhere within their search criterion, the company holding the trademark will appear at the top of the sponsor links (if they have placed a bid). However, under the incoming system the highest bidder, regardless of whether they are the trademark owner or not, will come top.

For example, in theory if BMW top bid on the term ‘Audi’ it would appear top of a search for ‘Audi’, above its rival even though Audi’s name has been directly used in the search box. Google says its new rules will ensure that BMW could not quote Audi or Audi’s URL in its ad, instead it must quote the address the link goes to and that searchers will be able to discern the situation from this. However, I totally disagree.

My understanding of searcher behaviour is that they go to Google because they fundamentally trust the accuracy of its results. Because of this, I believe searchers will automatically click on top matches without appreciating the reason for their top listing.

And it is not just the searcher who is losing out. Online companies will also lose out because the top bidders will be effectively stealing their traffic, leaving them with the only option of handing over more pay-per-click cash to Google to keep on top.

Google has defended its policy change, saying that it will offer searchers more choice in the sponsors’ results section. However, cynics, including myself, aren’t buying this justification. The fact that this revenue driving change comes as Google has been experiencing a reduction in its Adword income for the first time is more than a coincidence in my opinion.

In fact, far from improving the choice available to customers, we at UKFast believe that search results will actually be compromised by the new rules, as searchers will be getting more generalised returns than before. They will actually be getting the returns the big spending advertisers want, while Google will be getting the financial returns it wants.

These new rules leave Google’s ethos, of delivering best quality search matches, in tatters.

Tags: adwords, google, trademarks
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Microsoft opens up the search market?

Jonathan Bowers, February 6th 2008, 3:56PM

It has been almost a week since Microsoft put a deal on the table for Yahoo! to consider. While we don't seem to be hearing much yet from Jerry Yang and his board of directors the rest of the industry has plenty to say - especially Google.

Google is vocal but not quite uniform in its response. One minute, MD for UK Sales Mark Howe is welcoming the competition and the next, senior vice president David Drummond is appealing to competition commissions that a merger will give rise to unfair dominance.

Naturally, the online marketing community is welcoming a long overdue challenge to Google's advertising strength but there's more to this bid underlying Google's concern than many realise. Focus has been placed on the online applications side of a deal but Microsoft has for a while now been developing its demographic ad/search capabilities and has only one rival in this area - Yahoo!.

It is difficult to get hold of accurate figures, but Wikipedia cites Windows Live Hotmail as having 260million accounts in existence which means a hugely valuable database of user information activated when users browse after login. In recent statistics, comScore places Yahoo as the web mail leader with 255m accounts so while something is a little awry it is clear is that Microsoft - with the addition of Yahoo's user data would indeed be a very formidable force in the digital advertising market.

With Google's sign up email (gmail) tiny in comparison, the ability to target ads to the right demographic is one of Google's weaknesses within the market. And with the search leader's DoubleClick acquisition moving forward Microsoft needs to do something to avoid being left behind entirely. The Yahoo! bid brings it back in the eyes of all involved as a force to be reckoned with.

I for one am very excited about how this will develop over the coming weeks and months.

Tags: advertising, google, microsoft, search, yahoo!
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