How Does the Use of Trademarks by Third-Party Sellers Affect Online Search?

Authors:
Lesley Chiou;Catherine Tucker
Affiliations:
Economics Department, Occidental College, Los Angeles, California 90041;MIT Sloan School of Management, Cambridge, Massachusetts 02142/ and National Bureau of Economic Research, Cambridge, Massachusetts 02138
Venue:
Marketing Science
Year:
2012

Citing 6
Cited 0

Modeling Browsing Behavior at Multiple Websites

Marketing Science
Optimal Feature Advertising Design Under Competitive Clutter

Management Science
Analyzing the Relationship Between Organic and Sponsored Search Advertising: Positive, Negative, or Zero Interdependence?

Marketing Science
Google AdWords and European trademark law

Communications of the ACM
Search Engine Advertising: Channel Substitution When Pricing Ads to Context

Management Science
Regulation of Digital Businesses with Natural Monopolies or Third-Party Payment Business Models: Antitrust Lessons from the Analysis of Google

Journal of Management Information Systems

Quantified Score

Hi-index	0.00

Visualization

Abstract

Firms that sell via a direct channel and via indirect channels have to decide whether to allow third-party sellers to use trademarked brand names of products in their advertising. This question has been particularly controversial for advertising on search engines. In June 2009, Google started allowing any third-party reseller of a product to use a trademark such as “DoubleTree” in the text of its ad, even if the reseller did not have the trademark holder's permission. We study the effects of this change empirically within the hotel industry. We find some evidence that allowing third-party sellers to use a trademark in their online search advertising weakly reduced the likelihood of a consumer clicking on a trademark holder's paid search ads. However, the decrease in paid clicks was outweighed by a large increase in consumers clicking on the unpaid links to the hotelier's website within the main search results. Our evidence shows that when a third-party seller focuses on a trademarked brand in its ads, the ads become less distinct, and customers are more likely to ignore the advertised offers and buy from the direct channel.