Featured Research

from universities, journals, and other organizations

Online advertising: Using competitors' brand name as a keyword can backfire

Date:
July 14, 2014
Source:
Institute for Operations Research and the Management Sciences
Summary:
Buying keywords of a popular competitors' brand names on search engines such as Google and Bing can backfire according to a new study. Firms often buy brand names of better-known rivals' to reach buyers looking for rivals' products or to be seen in the company of more popular companies. However, contrary to common belief, when an inferior brand's ad is seen next to a superior brand's web links, a large difference in reputation is further magnified in the minds of consumers.

Buying keywords of a popular competitors' brand names on search engines such as Google and Bing can backfire according to a new study in the Articles in Advance section of Marketing Science, a journal of the Institute for Operations Research and the Management Sciences (INFORMS).

Firms buy specific keywords, including competitors' brand names, on search engines to reach consumers searching for those words. Online advertisements employing such keywords are called search ads. Sometimes a brand such as Nissan Altima will buy search ads to reach customers who conduct a search using a rival's brand name, such as Camry, as the keyword. Such ads can backfire if the advertising brand is much inferior in quality relative to the rival brand.

"The Company that You Keep: When to Buy a Competitor's Keyword" is by Preyas S. Desai and Richard Staelin, Professors at the Fuqua School of Business, Duke University and Woochoel Shin, professor at the Warrington College of Business Administration, University of Florida. The authors are members of the INFORMS Society for Marketing Science (ISMS).

Firms often buy brand names of better-known rivals' to reach buyers looking for rivals' products or to be seen in the company of more popular companies. However, contrary to common belief, when an inferior brand's ad is seen next to a superior brand's web links, a large difference in reputation is further magnified in the minds of consumers. The authors explain this observation citing a psychological phenomenon known as assimilation and contrast.

Professor Shin explains, "The proximate placement of two very dissimilar quality brands such as Sony and Haier causes the higher-end brand (Sony) to be rated higher than usual, while the lower-end brand (Haier) to be rated lower than usual." However, he says, "These results would reverse if the two brands were similar in quality, such as Camry and Altima." In the latter case, the advertised brand, Altima, would be rated higher than usual and the reference brand, Camry, would be rated lower than usual. Thus, the choice to advertise a target brand in searches for a rival brand is not obvious but depends on the quality difference between the two brands.

Using a game-theory model, the authors show when a brand should choose to advertise next to a rival brand and when not. The authors conclude that lesser-known brands that want to free-ride on their competitor's fame should not advertise on the rival's brand name if they are significantly inferior to the rival. On the other hand, target brands that are slightly inferior (but not significantly inferior) to a rival brand should advertise in searches for the rival brand.

The authors also find that sometimes a firm should buy its own brand name for defensive reasons, even though the search engine would list its website for free. For example, Toyota might find it beneficial to buy its own brand name as a search term to counter the effects of other competitors buying it. This possibility can lead to two rivals spending money in buying the same search term and canceling out each other's ads. In the end, neither firm benefits from the ad spending, and the only beneficiary is the search engine, which pockets the rivals' ad dollars.

Optimizing the set of keywords to use in search advertising is one of the most challenging problems faced by advertisers. The authors' results provide advertisers a framework for choosing keywords among brand names.

This research was made public in conjunction with the INFORMS Society for Marketing Science (ISMS). ISMS is a group of scholars focused on describing, explaining, and predicting market phenomena at the interface of firms and consumers.


Story Source:

The above story is based on materials provided by Institute for Operations Research and the Management Sciences. Note: Materials may be edited for content and length.


Journal Reference:

  1. Preyas S. Desai, Woochoel Shin, Richard Staelin. The Company That You Keep: When to Buy a Competitor's Keyword. Marketing Science, 2014; 140401113224005 DOI: 10.1287/mksc.2013.0834

Cite This Page:

Institute for Operations Research and the Management Sciences. "Online advertising: Using competitors' brand name as a keyword can backfire." ScienceDaily. ScienceDaily, 14 July 2014. <www.sciencedaily.com/releases/2014/07/140714133958.htm>.
Institute for Operations Research and the Management Sciences. (2014, July 14). Online advertising: Using competitors' brand name as a keyword can backfire. ScienceDaily. Retrieved August 28, 2014 from www.sciencedaily.com/releases/2014/07/140714133958.htm
Institute for Operations Research and the Management Sciences. "Online advertising: Using competitors' brand name as a keyword can backfire." ScienceDaily. www.sciencedaily.com/releases/2014/07/140714133958.htm (accessed August 28, 2014).

Share This




More Mind & Brain News

Thursday, August 28, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Treadmill 'trips' May Reduce Falls for Elderly

Treadmill 'trips' May Reduce Falls for Elderly

AP (Aug. 28, 2014) Scientists are tripping the elderly on purpose in a Chicago lab in an effort to better prevent seniors from falling and injuring themselves in real life. (Aug.28) Video provided by AP
Powered by NewsLook.com
Alice in Wonderland Syndrome

Alice in Wonderland Syndrome

Ivanhoe (Aug. 27, 2014) It’s an unusual condition with a colorful name. Kids with “Alice in Wonderland” syndrome see sudden distortions in objects they’re looking at or their own bodies appear to change size, a lot like the main character in the Lewis Carroll story. Video provided by Ivanhoe
Powered by NewsLook.com
Stopping Schizophrenia Before Birth

Stopping Schizophrenia Before Birth

Ivanhoe (Aug. 27, 2014) Scientists have long called choline a “brain booster” essential for human development. Not only does it aid in memory and learning, researchers now believe choline could help prevent mental illness. Video provided by Ivanhoe
Powered by NewsLook.com
Personalized Brain Vaccine for Glioblastoma

Personalized Brain Vaccine for Glioblastoma

Ivanhoe (Aug. 27, 2014) Glioblastoma is the most common and aggressive brain cancer in humans. Now a new treatment using the patient’s own tumor could help slow down its progression and help patients live longer. Video provided by Ivanhoe
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins