A San Francisco tour operator, which is dependent on search engine marketing to attract clients, sued Groupon, alleging false advertising, or “bait and switch,” in its Google Adwords tactics.
The civil lawsuit was filed in U.S. District Court in the Northern District of California March 17 by San Francisco Comprehensive Tours, which does business as San Francisco Shuttle Tours and Wine Country Tour Shuttle.
The tour operator, in business since 2005, offers bus and walking tours of San Francisco, John Muir Woods and the vineyards of northern California, and even features a ferry/bay cruise to Sausalito.
Comprehensive tours alleges that in the fall of 2010 Groupon began buying Google AdWords for “San Francisco Tours,” “Alcatraz Tours” and “Napa Wine Tours,” promising up to 90% discounts, but when users clicked on these sponsored ads and navigated to the Groupon website, they’d find, with a handful of exceptions, that no such tours were being offered.
So, for example, the following image of an exhibit in the suit shows Groupon with the top Google AdWords result for “san francisco tours” at 90% off, yet Groupon wasn’t offering tours of the city:
Once Groupon began buying these keywords, Comprehensive Tours saw “that the cost of its click-throughs began to skyrocket, and its ranking in the purchased placement area for searches … began to decline” while Groupon’s placements on these terms began to appear “at or near the top,” the suit alleges.
“By falsely representing to users and consumers interested in “San Francisco Tours” and “Napa Wine Tours” (and others such as “Alcatraz Tours” and “Alcatraz Tickets”) that it provides access to such services, defendant Groupon induces users and consumers to click through to its landing page,” the suit says. “This, in turn, artificially raises defendant Groupon’s objective popularity score, further cementing its placement at or near the top of the paid placement ads.”
Comprehensive Tours claims its SEM costs have soared to such an extent because of Groupon’s tactics that it will be forced to shut its business unless the court issues an injunction barring Groupon from such practices.
The injunction the tour operator seeks would prohibit Groupon “from using headlines, keywords, ad excerpts, or urls in response to Google searches that represent or imply a good or a service that Groupon and its advertisers are not in fact offering to users and consumers at the time of the search, at discounts that Groupon and its advertisers are not in fact offering to users and consumers at the time of the search” for terms “San Francisco Tours,” “Napa Wine Tours,” “Alcatraz Tours” and “Alcatraz Tickets.”
The tour operator also seeks damages and attorneys’ fees.
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Another good example for the in-destination tour and activity space. For local businesses who don’t rely on Google searches, this probably isn’t much of an issue. I doubt you would find a local spa advertising with Google Adwords. For local tour and activity operators that rely on in-bound tourism, this is a much larger issue. Thanks for posting this Dennis.
I have noticed this phenomenon on other languages/countries and its obviously a Groupon corporate tactics in many niches. For those who don’t know Adwords very well, its important to state that there are two ways of bidding for ‘non-core’ keywords for your campaign:
1) Bid for every association of the real keyword (which is in this case ‘San Francisco’) thus: bid for ‘San Francisco’
2) Create a custom list of associations, such as: ‘Tours in San Francisco’.
I think that there is very little that can be done with an advertiser that bids for ‘San Francisco’ and is also shown on ‘Tours in San Francisco’, but when an advertiser clearly focuses on a specific term the discussion is practical.
There are many interesting implications to this story. To name a few:
1) How companies like Groupon bid on ‘every popular term in the market’ – and paying more than it might worth for someone else.
2) The fact that in Google’s eyes its enough to create a landing page with the relevant keyword in order to reach high quality score. Groupon does go the extra mile to create not only relevant ad copies but also relevant landing pages to the targeted keyword. But as the claim notes: they don’t really have the inventory they promise.
3) How small businesses are being pushed from Adwords because of the big (and sometimes disproportionate) investments from the large advertisers.
4)How being dependent solely on Google for your traffic, and in this case: on very few keywords – is highly risky.
At the end of the day I think that the interesting reaction should come from Google and not from the court house. Just like they found creative ways to include hotel properties in the results, they should distinguish between actual offers of the service and random ‘users of the keywords’, which is what Groupon is at this case.
This has some serious implications for ad-word based market testing as well. This could set the precedent that you can be sued by competitors for placing an ad for a product that you’re just testing the market for.
I see ads like this from Travelzoo, Kayak, etc. all the time. Is anyone going after them? If not, why not?
Speaking for myself, I am running a business too and I can understand that it may not be easy to get google on your side. On the other hand, this is clearly unethical – but as Bryan says the ruling in this case could set important precedent and do we really wish for more regulations on the internet?
hey leon, i personally very rarely click on banners but i would have clicked the link with the “90% off” excerpt in the search engine.
Sorry, Ruby, but I fail to see how your reply is in any way related to my previous comment.
And now Google rewards them with a sign up box…
http://www.wouterblok.com/google-rewards-groupons-spam-m-all-adwords-wi