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 July 31, 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 July 31, 2014).

Share This




More Mind & Brain News

Thursday, July 31, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Dieting At A Young Age Might Lead To Harmful Health Habits

Dieting At A Young Age Might Lead To Harmful Health Habits

Newsy (July 30, 2014) Researchers say women who diet at a young age are at greater risk of developing harmful health habits, including eating disorders and alcohol abuse. Video provided by Newsy
Powered by NewsLook.com
It's Not Just Facebook: OKCupid Experiments With Users Too

It's Not Just Facebook: OKCupid Experiments With Users Too

Newsy (July 29, 2014) If you've been looking for love online, there's a chance somebody has been looking at how you're looking. Video provided by Newsy
Powered by NewsLook.com
How Your Face Can Leave A Good Or Bad First Impression

How Your Face Can Leave A Good Or Bad First Impression

Newsy (July 29, 2014) Researchers have found certain facial features can make us seem more attractive or trustworthy. Video provided by Newsy
Powered by NewsLook.com
Losing Sleep Leaves You Vulnerable To 'False Memories'

Losing Sleep Leaves You Vulnerable To 'False Memories'

Newsy (July 27, 2014) A new study shows sleep deprivation can make it harder for people to remember specific details of an event. Video provided by Newsy
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