How Does the Use of Trademarks by Third-Party Sellers

Affect Online Search?

Lesley Chiou and Catherine Tucker

When searching for the trademark doubletree on Google

Search engines have turned trademarking policy upside down.

• Resellers of branded products often want to match and personalize their ads to someone's search by using a trademarked brand name.

• Brand name trademark holders’ lawyers do not like this.– We study empirically whether they should

Study Policy Change on Google

• Google changed its policy in June 2009 for search advertising

• Allowed resellers of goods to use other firms's trademarks in the ad copy– Other search engines did not change their policies

and act as control group

What we find

• When resellers were allowed to use trademark in their ads– Decrease in paid search clicks for trademark

holder's ad– Increase in people clicking on the trademark

holder's main (non-paid) listing

• Advertising clutter literature can explain this– When all ads look alike customer tend to ignore

them

Managerial Insights

• Trademark policy online should not just be governed by traditional legal issues but also marketing considerations

• When others feature a firm’s trademark in their ads, that this can benefit their trademark holder

• Therefore firms should consider benefits of loosening their trademark policies online