This past week, 1-800-Contacts announced that they are suing their competitor, LensWorld, for bidding on trademarked terms such as “800 Contacts.” The particulars of the case are highlighted on University of Santa Cruz law professor, Eric Goldman’s blog. Trademark infringement is not new as Google has been sued on several occasions – successfully winning all suits. The premise behind the court rulings is that someone searching the phrase “Geico” is looking to either purchase or learn more about coverage. Therefore, a reseller, agent or information provider should have the right to bid on that trademarked term.

When it comes to keywords, Google will allow advertisers to bid on a competitor’s trademarked term. They do however, offer protection for trademark holders by allowing them to file a trademark complaint. Once enforced, Google will still allow companies to bid on a trademarked term, but will remove any ads that are using that keyword within their ad copy. Their rationale is that while you may not own the trademark for “Kleenex” someone searching for that term is interested in tissues. If you make or sell tissues, you are not misleading the searcher and have the right to appear for that phrase. Since it is a trademark though, you do not have the right to use it in your ad copy.

Yahoo! and MSN differ in that they will only allow an advertiser to buy a trademark term or use it in their ad copy if they are a reseller or a non-competitive information site. MSN offers a complaint form and, similar to Google, will allow an advertiser to bid on a trademarked term, but not use it in the ad copy. Yahoo! will accept screenshots of ads that you feel are in violation of their policy and review them for compliance. If an advertiser is in violation, Yahoo! will remove that keyword from the violator’s campaign.

Marketers still struggle with the “moral” debate of buying their competitors’ trademarked terms. If you make tissues, and 90% of the world refers to tissues as “Kleenex”, it would certainly make marketing sense to buy that term. However, Kimberly-Clark may have a problem with that.

What is significant about this case is that it an advertiser is suing another advertiser instead of the engine. As mentioned in the past, advertisers would file their complaints against the engines for allowing trademark terms to be bought by competitors. In almost all instances, the court rulings have favored the engines. This case will push the boundaries because 800-Contacts is asking the court to enforce their trademark regardless of the policies that a search engine has in place. Marketers are simply looking for the same trademark protection that they receive in the offline world. If the courts were to side with them, it would set a dangerous precedent that could trigger many lawsuits.

Regardless of how the court decides, this is a reminder to advertisers that bidding on competitors’ trademarked terms is a legal gray area, and may incur costly consequences.

Article by Megan Dallas and Matt Greitzer

Last week, Microsoft (parent company of AA|RF) announced the acquisition of FAST Search for $1.2 billion dollars. 9 days into the New Year, the first search acquisition is surprisingly not based on an engine trying to expand its distribution. Not to say that Microsoft has deep pockets, but they’ve spent $7.8 billion in a little over 6 months with their acquisitions of aQuantive, FAST Search, their Facebook partnership and distribution deal with Viacom. These are all strategic moves that will enable Microsoft to better position itself as a search destination by integrating into so many facets of the consumer ecosystem.

For those of us old enough (basically anyone over 32) to remember, FAST was the power behind AllTheWeb. In time, FAST moved away from consumer search and moved to working with enterprise search. With partners such as AutoTrader, Elsevier, Careerbuilder, and others, FAST has deep experience in various business verticals.

Microsoft will likely use the FAST acquisition as another way to learn more about search patterns and possibly embed Live Search into the enterprise offerings. History has shown that Microsoft knows how to monetize the desktop and leverage their software relationships. At first glance, FAST may seem like an off-strategy acquisition since it is not a consumer distribution deal. However, there are some clear opportunities for Microsoft to leverage existing FAST relationships to possibly develop more loyalty among business users.

Article by Joshua Palau

This week, we conclude our review of the MarketingSherpa Search Benchmark Guide, with Chapter 5 – Search Benchmark Data.

This last chapter used several charts detailing keyword prices, volumes, and conversion rates. As expected, keyword costs rose for the second year in a row, but not as aggressively. Overall costs rose 10% in the past year with the average CPC on Google rising 9% to $2.14 vs. $1.96 in 2006. Google also continues to be the most expensive by about .20 over Yahoo! and .40 over MSN. Costs on Shopping Engines were lower than the prices on the major engines but also increased by about 25% in the past year

When it comes to volume of keywords, companies spending over $25,000 per month are managing about 45,000 keywords. These companies are really working both the head and tail words as well as doing lots of landing page and message testing.

The section on conversion rates was dissected down into various charts to show almost every facet of PPC, SEO and the results of managing it in-house vs. outsourced. The conversion and visitors averages did not see a dramatic shift either up or down, but instead remained steady. Companies looking to increased conversion are placing a higher emphasis on ad copy and landing page testing as well. Conversions and visitor averages from SEO are also steady with a slightly higher “more effective” response than PPC. The biggest disparity in numbers came when comparing in-house vs. outsourced campaigns. Conversion rates on PPC and SEO for in-house campaigns were 3.84% and 2.62% respectively. This is likely due to some in-house staffers wearing multiple hats and needing to get more internal buy-in from management. When compared to an outsourced PPC and SEO solution, the conversion rates rise to 5.4% and 4.76%. While agencies may have cherry-picked their best clients, there is still a strong case to be made on letting specialists manage this facet of your business.

Overall the 2007 Sherpa report definitely provided a tremendous amount of detail for advertisers to understand more about where search is going how they can be successful.

Article by Joshua Palau

The organic and paid synergies continue to be lost with some marketers. Joshua Palau covers the organic/paid search continuum in this iMedia column.

Search Engine Land had a nice write-up on Comparing Search Popularity Ratings Services that is definitely worth reading.

Fellow Kentucky Wildcats fan, Mike McDonald provides a nice breakdown of the different perspectives that Google and MSN have on Paid Links and Cloaking.