Google sponsored links are a battleground between companies

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Google sponsored links are a battleground between companies

On supermarket shelves, the industry that wants to get more exposure for its products usually pays to stay on shelves that are at the height of the consumer’s eyes. Retail charges for product visibility. Those who display their goods on the shelf close to the floor, for example, do not pay anything. All to encourage impulse buying.

On the internet, Google, the world’s largest search engine, has discovered that it can do the same. Instead of the shelf at eye level, there are sponsored links at the top of the page.

If you are looking for real estate, for example, you can type names like Imovelweb, Zap Imóveis and Em Casa, or type the name of famous real estate companies, like Coelho da Fonseca and Lopes. Their website will appear in the search, but often in links in the middle or at the bottom of the page.

At the top of the search, appears who paid the most for the space: the so-called sponsored link. The practice is common, but it became a battleground when companies realized that they could use the tool to appear first in searches made directly by the name of their competitors.

In searches made by leaf in recent days by names of real estate websites, for example, the top of the results page was occupied, at different times, by Loft, a startup in the sector specialized in buying and selling real estate, and by Quinto Andar.

Sponsored links differ little in appearance from the regular link. The unsuspecting consumer will easily click on a link, thinking it is the company he was looking for, but ends up being directed to the competitor’s website. Every time this happens, Google gets paid.

The feature is extremely dynamic: a sponsored link can only be live for a few hours, only for a certain region, and directed to a specific audience profile identified by Google, according to the interest of the advertiser.

When searching for a company, the internet user can find up to four sponsored links before arriving at what Google calls an “organic result”, the company’s website.

“The CPC, or cost per click, is usually much higher than the CPM, the cost per million, which is the amount the advertiser pays to leave an advertising banner on a page”, says Deoclides Neto, CEO of Juit, a specialized startup in the legal world.

“In Google’s auction for the sale of sponsored links, an advertiser may want to pay up to R$5 for a click on a given word, which can be the name of the company itself, including. But if another is willing to pay R$25 for the same click, it’s his ad that will be at the top of the search”, he says.

For the Brazilian Justice, the behavior is considered illegal, as it configures diversion of customers, misuse of the brand and unfair competition, based on article 195 of the Industrial Property Law (9.279/96).

Companies that see their name being passed over in an internet search for the rival’s name have resorted to the courts. Juit survey for the leaf points out that the number of court decisions involving sponsored links is increasing year after year. In 2015, for example, there were 26 decisions; last year, 133.

“Only in 2020, due to the pandemic, there was a slowdown compared to the previous year, since the courts were closed for almost three months”, says Neto, noting that, from 2009 to the second week of February this year, there were 658 decisions. in Justice involving sponsored links.

The vast majority of them are favorable to companies that felt harmed by the practice. The focus of the complainants’ complaint is on the first sponsored link, which has the greatest capacity to divert traffic and is the most expensive. Fines, however, are negligible when it comes to large advertisers: they usually range from R$5,000 to R$200,000.

One of the most rumored cases, which is still ongoing, is that of Magazine Luiza and Via, owner of the Casas Bahia and Ponto chains. Both companies paid to appear in each other’s search with sponsored links.

The fight started on Black Friday, which became the most important date for online retail, even before Christmas. The two companies ended up going to court accusing each other of unfair competition, according to a report in the newspaper Valor Econômico.

wanted by leaf, companies say they do not comment on ongoing processes. The report found that the sponsored links have already been removed from each other’s search.

“Sponsored links are very dynamic: every hour, an advertiser can earn millions from exposure”, says Erich Gioanni, coordinator of the MBA in Business Management at Faculdade Trevisan.

“In just two hours last Black Friday, for example, Magazine Luiza sold 40,000 pairs of sneakers”, he says. “The time that a sponsored link is active contributes to divert traffic, it makes all the difference to the internet user who he finds at the top of the ranking”.

For Gioanni, the judicialization of cases has been increasing because e-commerce in Brazil is boiling, growing year after year, and has gained new impetus with the pandemic, which has reinforced the presence of brands in the virtual environment.

“The sponsored link is ostensible advertising with a deceptive character – I look for an A brand and I go for B”, says Patrícia Peck, partner at Peck Advogados and one of the country’s leading experts in digital law.

“An advertisement that parasitizes another’s brand cannot impose itself on the consumer’s right to information”, says Patrícia, a member of the board of the ANPD (National Data Protection Authority), a public administration body that oversees compliance with the LGPD (General Law of Personal Data Protection).

In cases that end up in court, according to Patrícia, Google is notified to remove the link from the air.

“If there is negligence on the part of the search engine to comply with the court decision, it is also liable, along with those who hired the sponsored link”, she says, stressing that it is very common among companies in the same sector –as it was with Magazine Luiza and Casas Bahia– that the practice is carried out against each other.

“Our guideline is that the advertiser doesn’t fight back, that he doesn’t do justice with the mouse itself, because there is an ethical responsibility involved”, he says.

Juliana Abrusio, partner in the digital law area at Machado Meyer, agrees. “As tempting as it is for the marketing department to fight back with another sponsored link, brand image is at stake,” she says.

The responsibility is even greater in cases of publicly traded companies, which follow corporate governance rules, within the ESG precepts.

“Except in very specific cases, in which the name of an advertiser is coincidentally the same as that of another –the Brazilian teaching group SEB, for example, and the French Grupo SEB, owner of Arno–, what exists is a parasitic use of the brand, via sponsored links”, she says, who foresees a new increase in the judicialization of cases this year.

THE leaf found that Google has no intention of changing its rules to prevent cases from ending up in court. The search engine believes that Brazilian law protects brands too much and advocates flexibility in the issue of sponsored links.

The main battles in Justice involving sponsored links

Companies Year
Futon Company X Westwing 2021
Take off X 123 Miles 2019
PagSeguro X SumUp & Mercado Pago & Cielo 2018
Hotel Urbano X Peixe Urbano 2018
Airbnb X Hotel Urbano 2017
Hotel Urbano X Expedia 2017
Giuliana Flores X Isabela Flores 2016
take off X Groupon 2015
take off X CVC 2015
Hotel Urbano X ​CVC 2015

Source: Juit

Search engine says practice is legitimate

In a statement sent to leafGoogle says that Google Ads, responsible for selling sponsored links, is a platform that allows “businesses of all sizes” to connect with consumers, constituting a “common and legitimate practice of market competition”.

“Google does not restrict the use of trademarks as keywords, but limits their use in the ad text, which is allowed only to the trademark holder,” he says.

According to Google, “the matter is in frank debate in Brazilian courts”.

On the other hand, Loft -which in one of the surveys carried out by leaf appeared at the top of the search for six of its competitors – it stated that the company was never sued for using sponsored links.

“This is a general practice in the Brazilian digital market, shared by all major agents, including in the real estate market, for years”, says Loft. The company says that it stopped making this type of ad in search of real estate companies, “so that these companies continue to grow their traffic to the maximum of their potential.”

In the real estate market, the leaf noted that in searches for Imovelweb and Em Casa, the Quinto Andar sponsored link was presented as the first result. Imovelweb stated that it is aware of the practice, but does not intend to take action, because “most accesses to the platform are made via organic and direct traffic, which reiterates the strength of the brand”.

Quinto Andar declined to comment on the matter.

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