Internet Advertising Is A Scary Place

Michael Hedges March 29, 2011 Follow on Twitter

By nearly every measure internet advertising is the fastest growing ad sector, taking money from all but television. The reasons are simple. More consumers attractive to advertisers are using the Web, certainly. More importantly, internet advertising is “cost effective,” meaning cheap.

Search advertising is the biggest segment of internet advertising. This is good news for Google and every other search engine portal selling ads. And they all sell ads. Google, then, is the biggest seller of search advertising in the world.

Google’s AdWords system sells keywords to advertisers who want their name and claim higher in search results in hopes of attracting consumers’ attention. It must work because companies try every trick in the book to get those keywords right. But, we’re all protecting intellectual property now and brand names are even more important.

Last year in a landmark decision at the European Court of Justice (ECJ) luxury goods seller Louis Vuitton  (LVHM) lost its case against Google over the sale of a brand name as a keyword to a third party that didn’t actually own the intellectual property rights to that brand name. In effect, a search engine company can sell the keywords. If the intellectual property rights owner wants to exert its rights to that name in court it must sue the buyer of the keyword.

As so they did. Floral network Interflora sued UK retailer Marks & Spencer (M&S) when its brand name was bought as a keyword by M&S. The result could have been consumer confusion and, then, lost business. Last week (March 24) ECJ Advocate General Niilo Jääskinen gave his non-binding opinion that, yes, M&S probably shouldn’t be able to buy the Interflora brand name as a keyword. The full court is expected to concur later this year. (See Interflora solicitor Marks & Clerk statement here)

The importance of Jääskinen’s opinion is not limited to a brand name dispute. Most national jurisdictions have notoriously vague laws related to anything internet. The Web has become  “wild west” of advertising where anything goes. Mounting case law, however, is changing that.

One would think buyers and sellers of advertising would want an end to confusion. Self-regulation agreements are a step but, lacking enforcement, the courts become the last resort. Even the “wild west” came to terms with order.

So disruptive that investors are salivating at a possible IPO is world-wide online coupon marketer Groupon. It’s also become a lawsuit magnet now that suing Google is no longer cool. Groupon spends millions on AdWords from Google, so much Google offered US$2 billion for it.

Groupon will find itself in a US District Court after a tour company complained (March 22) about false advertising and more. Groupon, alleges the tour operator, bids up the price of certain keywords even when it doesn’t offer coupons for the particular service.  There is, of course, a body of case law related to bait and switch advertising.

Order and the advertising world aren’t keywords fitting together very well. The ad people – and we love them – thrive on being disruptive. We just don’t necessarily want them as neighbors.

Back in traditional media, ad rules remain – country to country – notoriously confusing. Understanding alcohol advertising and sponsorship is particularly challenging. To that end, the European association of radio and television sales houses – egta – has gone live (March 24) with a dedicated website dedicated to everything you want to know about alcohol advertising. (See egta release with details here) A little less confusion is a good thing…usually.

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