Dialing in on Channel Conflicts

The single most annoying component of paid search marketing is self-competition. The single most annoying aspect of search for the consuming public is not being able to find what they are seeking. Multiple vendors selling the same product while bidding on the same keywords not only confuse shoppers, they drive up click costs thereby making a mockery of the free enterprise system.

Relevance and trademark law as it relates to search is a hot topic in the paid search space. We owe our constituents an enhanced, efficient search experience. Of course, not self-competing our collective marketing dollars down Thomas Krapper’s invention in the process would also be helpful.

Why are brands allowing their sales channels to compete with them in the bid for placement or pay-for-positioning arena? What strategies can you deploy with your sales channels to avoid conflicts or at least protect you intellectual property? At what point should lawmakers get involved and start calling out trademark infringement?

We can learn a lot from smart brands participating in paid search that not only are embracing the space but also manage conflicts effectively. Here’s an overview of the situation and how a few industry leaders approach conflicts in search.

Search Things First

Interactive agency Exile on 7th’s Media Buying Director, Scott Symonds, sums up the channel conflict situation well. “Generally speaking, we see manufacturers who hear about how effective search marketing is and want to initiate a campaign while forgetting that the more aggressively they bid, the more they are bumping their retailers out of positions. We have found this is usually a product of over-enthusiasm and under-sophistication of sales channels with newer companies and direct retailers.”

Consider the plight of the automobile shopper, namely yours truly. Since I’ve had it with the despicable irony of being able to see ocean oil rigs from my patio and paying the highest gas prices in the nation, I decided to do some research on hybrid electric cars. My Yahoo! search for Toyota Car turned up a laundry list of massive aggregators in the paid listings.

Of course, these sites, which are not Toyota, somehow offer me “wholesale pricing” or offer to put me in touch with a dealer who will get me a “no-haggle” price. Thanks – I just wanted to find the Toyota Website. Therein lies the source of frustration for Joe Consumer.

Searching for a marketing best practice in this paid search environment is like trying to find a needle in a stack of needles. I didn’t get to the official Toyota Website until I punched in the phrase, “I want the official Toyota Website”. Later, my fuel buying anger giving way to search frustration, I searched for a new Lexus instead. Wouldn’t you know it, up popped a paid link to said brand site when I used the search keyword “Lexus”.

Automotive isn’t the only area suffering from the channel competitive blues. Much in the same way, the travel industry has issues. My search for Hilton and Starwood Brand Hotels returned multiple paid search listings, some of which were brand sites. Most of the listings were similar to auto search results with travel booking sites like Hotels.Com.

Affiliate marketers have conflicting channel issues with search as well. Pacific Sunwear, for example, has a very elaborate affiliate program and no shortage of affiliates seeking to capitalize on PacSun brand equity in paid search.

Searching for a Best Practice

Some advertisers deliberately maintain a competitive presence in paid search. Lexus finds itself in the position of running ads on sites they bid for position against. For example, Lexus advertises on Edmunds.Com but competitively bids for positioning on Overture against them. “Lexus recognizes that car buyers visit such sites,” reports Nancy Inouye, interactive marketing manager for Lexus. “We view [paid search] as a proportionately small but necessary piece of our overall online media budget to protect our brand image and provide brand searchers with a direct connection to us.”

Big travel brands are in a similar position as automobile manufacturers with third-party sales channels. However, since booking and staying on some third-party sites preclude your ability to “rack up miles,” brands such as Starwood are leveraging the power of loyalty programs in addition to maintaining a focus on rate competitiveness. Another paid search advertiser, Hilton Hotels, has aggressive rate programs in place along with its strong loyalty initiative.

In the affiliate marketing world, Pacific Sunwear has the conflict problem all but licked. The online/offline retailer began as a surf shop in Newport Beach, California in the 1980s. Today, PacSun is a big name in the retail space selling in addition to private label goods, Quicksilver and Billabong branded items.

PacSun’s affiliate and search marketing program first caught my eye at the Ad:Tech San Francisco show in June. The company has a simple, smart approach to affiliate marketing with helpful tips and direct-to-the-point information. What really sets PacSun apart is a stern commitment to the affiliates in keeping competitive issues at bay.

“The key focus for us is maintaining lines of communication and building relationships with our affiliates,” according to Glenn Wilk, director of e-commerce & online marketing for Pacific Sunwear. “We really haven’t had any significant problems with conflicts.” However, Wilk added that keyword bid requests, which fall outside the affiliate guidelines, occur frequently. Not surprising since the brands Pacific Sunwear carries are among the most sought after in the highly lucrative youth category.

Kevin M. Ryan for Governor

Ebay recently requested that third parties not be allowed to bid on keywords containing their trademark. Google acquiesced. Why can’t Starwood do the same thing? Or, for that matter, Lexus? Where in the name of Earl’s Grey Ghost is Ralph Nader when you need him? Since his group was so quick to light a fire under the FTC’s rump, one would think he would be all over the trademark infringement issue since these multiple search listings are bound to confuse the heck out of consumers.

It’s time I took matters into my own hands and jump into the California gubernatorial race lunacy. As a search-marketing expert, I feel that I am overqualified for the position and I would greatly appreciate it if everyone would just start sending me money. My platform is similar to Arnold’s with the possible exception that I have actually accomplished something outside of film. In addition to search marketing, I know a great deal about motorcycles as well -- BMW, not Harley.

Also, having spent my entire career in indentured servitude for ad agencies, I am uniquely qualified to be a punching bag for the good people of the great state of California. The truth is, I have an extra 3,500 bucks (filing fee) lying around for the registration and my mom’s friends (65 signatures required) agreed to sign the petition. Thanks Mom! And thank you in advance for your support.

In the end, maybe the solution to channel conflicts in search would be for yours truly to get in there and handle the issue personally.

About the author: iMedia search columnist Kevin Ryan’s current and former client roster reads like a “who’s who” in big brands; Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services, and the Hilton Hotels brands, to name a few. He is currently Director Market Development of IPG’s Wahlstrom Interactive where he provides guidance in directional online marketing to Wahlstrom’s prestigious list of clients and sister agency brands.