Introduction: emancipation of consumers and retail 2.0
The development of the internet as a medium over the course of the last 15 years or so has changed the retail landscape dramatically. Consumers, no longer restricted to select from a few local shops are able to compare products and, more significantly, prices from across the world.
Where advertising used to be a one-way process and at fixed points in time, now advertisements are increasingly interactive, more precisely targeted and produced spontaneously. This trend will only continue as smartphones become more ubiquitous and consumers migrate online.
Just as in the past, those who stand out will prosper, and those who do not adapt or who get lost in the ‘chatter’ will fail. A strong offline brand is no guarantee of success in the new online world of retail 2.0 – witness the recent insolvencies of long-established names: HMV; Jessops; Blockbuster; Comet and JJB Sports.
At this critical time the key to success for high street retailers lies in the adoption of an online branding strategy which fully leverages their strongest asset: the goodwill in their brand.
Techniques adopted to improve brand profile online
So what techniques might a retailer adopt to improve its brand profile online? How legal are they?
The three techniques which stray most frequently into the world of intellectual property are:
purchase a ‘flagship’ domain name;
adopt search engine optimisation (SEO) techniques to ensure a high ranking in organic search engine results;
purchase advertisements to be displayed next to search engine results, usually known as keyword bidding.
Flagship domain names
For many businesses, this is regarded as highly important. Like a ‘flagship’ store, the flagship website address is the main one which will be used in advertising the brand’s presence online. It will lead to the home page of the retailer and, hopefully, link to all of the information on the website. The most desirable domain name tends to be brand.com, which might change hands for several million pounds.
Finding a website by direct navigation, that is, typing the flagship domain name into a browser, is the rudimentary form of locating information on the internet. It has a high margin of error because errors in punctuation or spelling lead to ‘dead ends’. It also requires repeated use of obscure computer terminology such as ‘http://www’.
Beyond the flagship however, the value of registering further domain names is questionable. Some brand owners adopt a strategy of registering all the variations and misspellings of domain names. This indiscriminate approach leads to high acquisition and maintenance costs for the domain name portfolio, potentially for addresses that will never be used. The low number of address bar ‘hits’ to each domain name also means that the return on investment is extremely low, as should be borne out by the brand’s website analytic data.
Results from search engines
The main method by which consumers find relevant websites is by typing words into a search engine. Using this method a consumer need not remember any punctuation, computer terminology or even the correct spellings of the brand in question. As a consequence, searches through search engines result in increased hits on the brand owners’ websites when compared to direct navigation.
The key issue for brand owners is to ensure that links to its website appear prominently in the results. The two strategies a brand owner must adopt to achieve prominence are:
- search engine optimisation (SEO) (which is free, as the website appears in the natural or organic section of the results); and
- keyword advertising (by which the advertiser pays the search engine provider every time his advertisement appears or is selected).
Search engine optimisation
Search engine optimisation, or SEO, is the process by which a retailer can manipulate the content of its website to make it appear more prominently in organic search results. For a brand owner to obtain a high ranking it must perform well when its value is assessed for its potential by the search engines’ algorithms. However, in most cases, a perfectly optimised website will still appear below the paid advertising. So why is SEO important?
The effectiveness of advertising in any medium diminishes over time. Online, this phenomenon, known as ‘ad blindness’, means consumers learn to ignore advertisements and look immediately for the organic search results, even if these are below paid keyword advertisements.
The introduction of more top-level domains and the increasing sophistication of consumers will only enhance the relative importance of SEO. The degree to which retailers are affected will of course depend on the their target demographic: brands for younger audiences who have logged more ‘net time’ are more likely to suffer from it than silver surfers.
“Flagship” domain names v. search engine optimisation: which is more important?
The short answer is, unfortunately, it depends. A single flagship domain name can cost several million dollars to acquire. A search engine optimisation strategy will cost a fraction of this. From a pure assessment of their contribution to the development of a strong online brand profile therefore, there is likely to be greater value to be gained from SEO. However, from a broader business perspective, other imponderables are likely to justify paying a premium for the right flagship domain name.
A well optimised website hosted at a domain name which closely resembles the search term will always rank highly. The flagship domain name is also an important business asset at the core of its online activity. Multiple flagships are likely to dilute the brand profile without any improvement in search rankings.
Retailers considering the acquisition or renewal of large domain name portfolios in dozens of obscure jurisdictions may wish to assess the value to be gained from doing so and whether better results might be achieved by focussing resources on SEO to direct traffic to the flagship domain name.
Use of brand names as keywords
Finally, by far the most widely discussed issue at the intersection of of intellectual property and the internet, is the technique of using a competitor’s trade marks to improve a business’s own online profile.
Historically, these marks may have been included in a website’s invisible code as metadata with the intended effect being that the miscreant’s website is displayed when a search is performed for the trade mark. Wise to this, search engines tend to filter out such results. Nowadays, the flurry of litigation stems principally from the use of competitors’ trade marks in keyword advertising, such as Google’s AdWords advertising service.
Keyword advertising functions by the search engine auctioning the right for a retailer’s advertisement to be displayed when a specific term is entered by a consumer. Retailers bid to try and ensure the most prominent position in the results page; the higher the bid, the more prominently the advertisement is displayed.
For generic terms where no party owns a word, such as a description, this does not present a problem. However, where businesses are bidding on competitor’s trade marks and achieving more prominence in search results, the depths of what is permissible have been explored in several key decisions.
One consequence of bidding on keywords is that brand owners must compete financially against their competitors for the right to appear in the most prominent advertisement. However, by bidding on its own mark or keyword, a brand owner will inflate the bidding price, which in turn signals the importance of the mark or word to competitors, which further inflates the price and its own advertising costs.
Several cases have been referred to the Court of Justice of the European Union where brand owners have purchased their competitors’ trade marks in order to display their own advertisements in search. The judgments in Google France, Die Bergspechte, Portakabin and Interflora (iPit posts here) handed down so far set out a clear legal framework upon which national courts must interpret.
- ‘Flagship’ domain names will continue to play an important role and attract a premium. New gtlds will give more options and may give an advantage but poor websites or entire domains will always perform poorly. Prices may fall but beware dilution.
- SEO will become increasingly important as consumers’ exposure to advertisements increases and methods of avoiding them evolve in sophistication
- keyword advertisements as part of a targeted and focussed campaign can yield results. Bidding on competitors’ brands requires commercial judgment and liability for infringement will depend on the protection in place, target demographic and goods.
- The pursuit of court proceedings against individual businesses for AdWords breaches has a high marginal cost for small scale infringement. Resources allocated to SEO and appropriate keyword advertising might be more cost-effective.
Taken from my presentation notes for the Intellectual Property and Retailers conference, London 13 February 2013