IDEAS home Printed from https://ideas.repec.org/a/wly/empleg/v11y2014i4p718-750.html
   My bibliography  Save this article

Trademarks, Triggers, and Online Search

Author

Listed:
  • Stefan Bechtold
  • Catherine Tucker

Abstract

Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search engine users. The fact that advertisers can buy a keyword that contains a trademark they do not own has caused controversy worldwide. To explore the actual effects of trademark and keyword advertising policies, we exploit a natural experiment in Europe. Following a decision by the Court of Justice of the European Union, Google relaxed its AdWords policy in continental Europe in September 2010. After the policy change, Google allowed advertisers to select a third party's trademark as a keyword to trigger the display of ads, with only a limited complaint procedure for trademark owners. We use click‐stream data from European Internet users to explore the effect this policy change had on browsing behavior. Based on a data set of 5.38 million website visits before and after the policy change, we find little average change. However, we present evidence that this lack of average effect stems from an aggregation of two opposing effects. While navigational searches are less likely to lead to the trademark owner's website, non‐navigational searches are more likely to lead to the trademark owner's website after the policy change. The effect of changing keyword advertising policies varies with the purpose of the consumers using the trademark, and it is more pronounced for lesser‐known trademarks. The article points to tradeoffs trademark policy is facing beyond consumer confusion. More generally, the article proposes a novel way of analyzing the effect of different allocations of property rights in intellectual property law.

Suggested Citation

  • Stefan Bechtold & Catherine Tucker, 2014. "Trademarks, Triggers, and Online Search," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 11(4), pages 718-750, December.
  • Handle: RePEc:wly:empleg:v:11:y:2014:i:4:p:718-750
    DOI: 10.1111/jels.12054
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jels.12054
    Download Restriction: no

    File URL: https://libkey.io/10.1111/jels.12054?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lesley Chiou & Catherine Tucker, 2012. "How Does the Use of Trademarks by Third-Party Sellers Affect Online Search?," Marketing Science, INFORMS, vol. 31(5), pages 819-837, September.
    2. Yannis Bakos & Florencia Marotta-Wurgler & David R. Trossen, 2014. "Does Anyone Read the Fine Print? Consumer Attention to Standard-Form Contracts," The Journal of Legal Studies, University of Chicago Press, vol. 43(1), pages 1-35.
    3. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    4. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    5. Thomas Blake & Chris Nosko & Steven Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica, Econometric Society, vol. 83, pages 155-174, January.
    6. Landes, William M & Posner, Richard A, 1987. "Trademark Law: An Economic Perspective," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 265-309, October.
    7. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    8. Aguiar, Luis & Martens, Bertin, 2016. "Digital music consumption on the Internet: Evidence from clickstream data," Information Economics and Policy, Elsevier, vol. 34(C), pages 27-43.
    9. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    10. Luis Aguiar & Bertin Martens, 2013. "Digital music consumption on the internet," JRC Working Papers on Digital Economy 2013-04, Joint Research Centre.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrey Simonov & Shawndra Hill, 2021. "Competitive Advertising on Brand Search: Traffic Stealing and Click Quality," Marketing Science, INFORMS, vol. 40(5), pages 923-945, September.
    2. A. Daly & A. Scardamaglia, 2017. "Profiling the Australian Google Consumer: Implications of Search Engine Practices for Consumer Law and Policy," Journal of Consumer Policy, Springer, vol. 40(3), pages 299-320, September.
    3. Lesley Chiou & Catherine E. Tucker, 2022. "How Do Restrictions on Advertising Affect Consumer Search?," Management Science, INFORMS, vol. 68(2), pages 866-882, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Decarolis & Gabriele Rovigatti, 2021. "From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising," American Economic Review, American Economic Association, vol. 111(10), pages 3299-3327, October.
    2. Darius Schlangenotto & Martin Poniatowski & Dennis Kundisch, 2018. "What Drives Paid Search Success: A Systematic Literature Review," Working Papers Dissertations 31, Paderborn University, Faculty of Business Administration and Economics.
    3. Andrey Simonov & Shawndra Hill, 2021. "Competitive Advertising on Brand Search: Traffic Stealing and Click Quality," Marketing Science, INFORMS, vol. 40(5), pages 923-945, September.
    4. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, July.
    5. Joseph Golden & John Joseph Horton, 2021. "The Effects of Search Advertising on Competitors: An Experiment Before a Merger," Management Science, INFORMS, vol. 67(1), pages 342-362, January.
    6. Vilma Todri, 2022. "Frontiers: The Impact of Ad-Blockers on Online Consumer Behavior," Marketing Science, INFORMS, vol. 41(1), pages 7-18, January.
    7. Xiaomeng Du & Meng Su & Xiaoquan (Michael) Zhang & Xiaona Zheng, 2017. "Bidding for Multiple Keywords in Sponsored Search Advertising: Keyword Categories and Match Types," Information Systems Research, INFORMS, vol. 28(4), pages 711-722, December.
    8. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    9. Cowling, Marc & Ughetto, Elisa & Lee, Neil, 2018. "The innovation debt penalty: Cost of debt, loan default, and the effects of a public loan guarantee on high-tech firms," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 166-176.
    10. Muriel Perrino & Nathalie Rubio, 2005. "What Anti-Dilution Law Should Learn from the Informative View of Advertising," CAE Working Papers 36, Aix-Marseille Université, CERGAM.
    11. Crass, Dirk & Schwiebacher, Franz, 2013. "Do trademarks diminish the substitutability of products in innovative knowledge-intensive services?," ZEW Discussion Papers 13-061, ZEW - Leibniz Centre for European Economic Research.
    12. Wei Zhou & Zidong Wang, 2020. "Competing for Search Traffic in Query Markets: Entry Strategy, Platform Design, and Entrepreneurship," Working Papers 20-12, NET Institute.
    13. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    14. Centner, Terence J. & Turner, Steven C. & Bryan, John T., 1989. "Product Differentiation Protection: Developing A Strategy For Multiple Producers Of Regional Specialty Crops," Journal of Food Distribution Research, Food Distribution Research Society, vol. 20(2), pages 1-8, September.
    15. Navdeep S. Sahni & Charles Zhang, 2024. "Are consumers averse to sponsored messages? The role of search advertising in information discovery," Quantitative Marketing and Economics (QME), Springer, vol. 22(1), pages 63-114, March.
    16. Stephen Petrie & Mitchell Adams & Ben Mitra‐Kahn & Matthew Johnson & Russell Thomson & Paul Jensen & Alfons Palangkaraya & Elizabeth Webster, 2020. "TM‐Link: An Internationally Linked Trademark Database," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(2), pages 254-269, June.
    17. Motta, Massimo & Penta, Antonio, 2022. "Market Effects of Sponsored Search Auctions," TSE Working Papers 22-1370, Toulouse School of Economics (TSE).
    18. Thomas Blake & Chris Nosko & Steven Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica, Econometric Society, vol. 83, pages 155-174, January.
    19. Khavul, Susanna & Deeds, David, 2016. "The Evolution of Initial Co-investment Syndications in an Emerging Venture Capital Market," Journal of International Management, Elsevier, vol. 22(3), pages 280-293.
    20. Gary Bolton & Ben Greiner & Axel Ockenfels, 2013. "Engineering Trust: Reciprocity in the Production of Reputation Information," Management Science, INFORMS, vol. 59(2), pages 265-285, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:empleg:v:11:y:2014:i:4:p:718-750. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1740-1461 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.