Groupon Sued For Its Google AdWords

from the advertise-better dept

A San Francisco tour company is now suing Groupon because it doesn't like the company's ads that were placed on Google AdWords. As you probably know, Google AdWords involves buying up keywords for ads that will be shown when people search for those words. Part of the process is that you bid how much you're willing to pay per click, and Google sprinkles some of its magic pixie dust and ranks the ads on a combination of how much people are willing to pay... and how often such ads are clicked (i.e., how effective they are).

However, San Francisco Comprehensive Tours is claiming that Groupon put up false or misleading ads based on the types of terms it used to buy. Things like "San Francisco Tours," "Alcatraz Tours," and "Napa Wine Tours." Apparently Groupon bid a high amount, because its ads shot up the list and the tour company claimed it had to pay more itself to keep moving up the ad listing. Of course, that's just how AdWords works, so what's the problem? Well, according to the tour company, Groupon was being misleading, because most of the time it offers none of the things that were being advertised, though in a few rare instances it has offered those things.

I can certainly understand why the tour company is upset, but I'm not sure it should be legally actionable. First of all, assuming there was a legitimate competitor, and they did the exact same thing, there would be no problem. Thus, just having your ads pushed down by a competitor is not and should not be against the law. And, if that's the case, can the tour company really claim "harm" here? It could have faced the exact same issue from a competitor, or even from someone who just bought the keywords to advertise something else. So, the real issue is whether the ads were misleading. And, if that's the case, it seems like more of an issue for the FTC rather than a private company. In fact, I'm wondering if there really was that much "harm" to the tour company? After all, if someone really is looking for a Napa wine tour, and they go to Groupon and see no such tour being offered, they're likely to go back and visit the next compelling ad on the list. In other words, this seems like the sort of thing that should pretty quickly work itself out.
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Filed Under: ads, competition, false advertising
Companies: groupon, sf comprehensive tours


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  1. icon
    Brian B. (profile), 24 Mar 2011 @ 8:21pm

    Of course, this company is just causing more harm to itself because it will earn a reputation of being litigious.

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