Losing control of your brand is deadly

MIKE O'DONNELL
Last updated 05:00 25/05/2013

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OPINION: Thirty years ago my brother had a GTHO Phase 3 Ford Falcon.

Known affectionately in car circles just as "The HO", the Phase 3 was the high point in the Falcon's 50-year life. An uncouth, muscular brute of a car, it scored a truckload of wins including an outright win at Bathurst in the 1971 Hardie-Ferodo 500.

I remember the ground shaking when he started it up and the way you got pushed deep into the black vinyl bucket seat courtesy of the seriously tweaked 351 V8.

Sadly, not all Falcons have been as ground-breaking as the Phase 3, but nonetheless the news this week that Ford planned to cease car production in Australia caused an emotive outcry from fans of the big blue oval.

Various reasons were given, including the cost of labour, the Aussie dollar and Asian efficiency. But to my thinking it was an example of Ford Australia losing control of its brand.

Once Ford USA introduced its "go further" brand last year, along with its commitment to have the most fuel efficient car in every segment, the outdated Falcon and the engine production plant in Geelong were doomed.

Ford's not the only company that's challenged with losing control over its brand, with news last month that Google was no longer going to prevent companies from buying trademarked keywords.

A keyword is the term you type into a search engine, before you tell it to go and find stuff. So if you are looking for a new car you might tap in "new cars for sale" and the search engine lists webpages with content relevant to those keywords.

The more specific the keyword, the more specific and useful the results will be. From a consumer perspective, this typically means brand names, say Ford or Holden.

Until last month, Google prevented New Zealand companies from using the registered trademarks of other companies as keywords. So if Holden tried to use Ford's brand as a keyword, Ford could get Google to remove the keywords. And we weren't alone, the same policy applied to a host of countries, including China, Australia and Brazil.

Intuitively this makes sense. If you own the intellectual property for your branded products, you are going to be miffed if a competitor uses that property to lure customers to their competing product. And in a world where most consumers' buying journeys begin with a search engine, keywords are about as influential in the buying process as you can get.

But four weeks ago, Google removed the restriction against companies using trademarked key words in Google AdWords advertising campaigns. Google now has one single AdWords trademark policy for keywords right across the world. And that policy is effectively "fill your boots".

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BNZ can buy ASB AdWords, CourierPost can buy NZ Couriers and NZ Herald can buy Stuff. The only remaining restriction is that trademark owners can still complain to Google if their brand is used in ad copy (i.e. in the actual wording used in the AdWord).

The impact could be considerable. First, companies will lose control they previously had over their brands when it comes to keywords in Google, unless they are prepared to fund a lengthy legal process with no promise of result.

Second, companies with the deepest pockets should be able to dominate keywords simply by bidding more for them. There's no reason this wouldn't extend to government agencies as well. If you are a security firm you can buy "NZ Police".

While larger companies will likely do well out of the extra traffic, smaller companies will probably suffer as they may not be able to afford to bid for their own brand name.

Google's stated objective from the change is to provide users with greater choice. And in this context, greater choice can include seeing ads for Holdens even though you searched for Fords. Google describes it as akin to a shopper seeing a variety of brands' products on a store shelf. Meanwhile, Google looks set to do well out of it commercially.

It will avoid it being involved in time-consuming spats between IP owners and cheeky competitors, and will enjoy increased revenue streams as companies participate in bidding wars for their own brands.

And thanks to a couple of deft manoeuvres called the Dutch Sandwich and the Double Irish, it's unlikely to be encumbered with too much tax.

Losing control of its brand has cost Ford Australia dearly, and will cost jobs, growth and people's livelihoods. While it's still early days to measure the impact of Google's new keyword policy on local brands in New Zealand, it will be interesting to see what sort of step growth the paid search market sees in predatory AdWord spend.

Like the Phase 3 Falcon, it could prove pretty unsettling.

- Mike "MOD" O'Donnell is a professional director and eCommerce manager. His Twitter handle is modsta and he's owned two Capris and an Escort but always wanted an XAGT Falcon.

- BusinessDay.co.nz

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