It Is Allowed, Which Is Not the Same as Advisable
Someone notices a rival's ad sitting above their own listing when they search their own company name. Or a competitor's account gets mentioned and the thought arrives on its own: could we do that to them?
You can. Google permits it, and its own policy is explicit that using trademarks as keywords is allowed. Nobody has to approve it, your competitor is not notified, and you could switch it on this afternoon.
Almost everything that makes it a bad idea sits downstream of that permission, in the part nobody reads.
The Line Google Draws Runs Straight Through Your Ad
Here is the distinction that decides everything, and it is the one most articles on this subject blur.
The keyword is fine. The ad text is not.
Google's trademark policy protects the trademark inside the advertisement, not the term in your targeting. So you may bid on a competitor's name all day. What you may not do is write their name into your headline or description. A trademark owner can complain, Google reviews it, and if the complaint is upheld the use gets restricted.
Read the consequence carefully, because it is worse than losing one ad. When Google restricts a trademark after a complaint, the restriction is generally applied on an ongoing basis to any ads using the same second-level domain in their final URL. That is not a single disapproval. That is your whole domain carrying a restriction on that term, across every campaign you run, from then on.
And the Letter Is a Real Letter
Google's policy is not the only thing you are exposed to. Trademark law exists independently of Google's rules, and a competitor who feels you are trading on their name can instruct a lawyer without involving Google at all.
A cease and desist is not a catastrophe, but it is a real letter, it arrives at your business, and answering it properly costs money whether or not you were in the wrong.
There is a second cost that people underestimate, and it is not legal. In small and local business, this is personal. You are not bidding against a brand, you are bidding against a person who will hear about it, who may know you, and who may well be in the same trade association, the same networking group or the same street. Some of them will bid straight back, and you will both spend money attacking each other's names while your actual customers search for the service and find whoever else showed up.
The Ad You Are Permitted to Write Is a Worse Ad
Now the mechanism that makes this expensive, and it follows directly from the rule above.
Somebody types a competitor's name. Your ad appears. You are not allowed to say the name they typed. So your ad has to talk around the exact thing that is in the searcher's head, which produces the vague copy you have seen a hundred times: a generic promise, a category description, something about local, trusted and experienced.
Google notices this. Ad relevance is one of the components behind Quality Score, and it is a judgment about how closely your ad matches the intent behind the search. An ad forbidden from naming the thing being searched for is structurally poor at matching it.
The practical result is that you pay a premium for a click you were already going to convert badly. The single lever that normally rescues a weak keyword, writing an ad that mirrors the search, is the one lever this tactic forbids.
Then There Is the Person Who Never Read Your Ad
This is the cost that never appears in any column of your reporting, and in our experience it is the one that decides whether competitor bidding is worth doing at all.
Somebody searches for a company by name. They know exactly who they want. They are not evaluating options, they are navigating, the way you type a website name rather than a URL. The results load, they click the first thing at the top, and the first thing at the top is you.
They did not read the ad. They were not comparing. They believe they have arrived at the company they searched for.
You have now paid for that click, the same way you pay for every other click that was never going to become a customer. That is the visible half. The invisible half is what happens next, and it is worse: somebody in your business picks up the phone to a person who thinks they are speaking to another company entirely. There is a confused conversation. It takes a few minutes to establish what has happened. Occasionally the caller is annoyed, because they believe they were tricked, and sometimes they were not entirely wrong.
There is a partial defense, and it is worth knowing even though it does not solve the problem. You can exclude your own brand terms from the campaign, so you are not paying twice to reach people who were already coming to you. You can point competitor traffic at a page built for a comparison rather than your homepage, so the arriving stranger immediately understands where they have landed and why. And you can add the competitor's obvious misspellings as negatives rather than chasing them, because those searches are navigational almost without exception.
None of that stops the fundamental problem, which is that a share of the people clicking believe you are somebody else. It only reduces how often it happens and softens the landing when it does.
Multiply that across a month. You are paying for the clicks and paying again in the time of whoever answers, and none of it appears in the account as anything other than traffic that did not convert, which is the same blind spot that makes clicks from people who are not people so easy to keep paying for.
The Cheap Click Is the Trap, Not the Prize
The argument in favor usually starts here: competitor terms are cheaper than your core service terms. Fewer advertisers fight over them, so the auction is thinner and the cost per click looks attractive next to the terms everyone wants.
That much is often true, and it is exactly why the tactic keeps getting recommended. A lower cost per click is easy to see and easy to like.
It is also the wrong number to judge this on. Cheap clicks that do not convert are not cheap, they are just a slower way to spend the same money. > Cheap clicks that do not convert are not cheap. They are a slower way to spend the same money.
A term at a third of the price that converts at a fifth of the rate is worse, not better, and the arithmetic only becomes visible once you look at cost per acquired customer rather than cost per click.
So when somebody shows you that competitor keywords are inexpensive, agree with them, and then ask the second question. What did the traffic do after it arrived? That is the number that settles it, and it is the number this tactic tends to lose on.
When It Genuinely Does Work
None of this makes it always wrong. It works in specific conditions, and they are narrower than the people selling the tactic suggest.
It works when you have a real, demonstrable advantage over the named competitor. Not "we care more." Something a stranger can check in ten seconds: a price, a guarantee, a turnaround time, a certification they do not hold.
It works when the deal is large enough that a poor conversion rate still pays. If one win is worth thousands, a handful of expensive clicks is arithmetic you can live with. On a low-ticket service it almost never is.
It works when the searcher is genuinely still deciding rather than navigating. People comparing two firms behave differently from people looking for one.
And it works far better when the landing page does the work the ad is not allowed to do. You cannot name them in the ad, but you can compare yourself to them honestly on your own page, on the facts, and let somebody make an informed decision. That is where the argument belongs.
Always Its Own Campaign. Never Inside a Real One.
This is the part we treat as non-negotiable, and it is the difference between a controlled experiment and a slow leak.
Competitor terms go in their own campaign, on their own budget, always. They never sit inside a campaign that is targeting the searches you actually want.
The reasons stack up quickly.
Conversion rates on competitor terms are markedly lower than on your core service terms. Put both in one campaign and that weak performance is averaged into the numbers you use to make decisions about the good keywords, and now you are drawing conclusions from a blend.
Budget is shared inside a campaign. Every dollar spent proving that competitor bidding does not work is a dollar that was not spent on the searches that were converting fine.
Automated bidding learns from what it is given. Feed one strategy two populations that behave nothing alike and you are asking it to optimize toward an average that describes neither.
And separation gives you a switch. A standalone campaign can be paused on a Tuesday afternoon with no effect on anything else, which matters, because the honest expectation here is that you may well be turning it off.
The same logic runs through how account structure decides what gets starved: things that behave differently should be measured and funded separately.
Check Whether Anyone Is Doing It to You First
Before spending a cent attacking somebody else's name, find out what is happening on yours, because the defensive version of this is a far better trade.
Your own brand term is the cheapest, highest-converting keyword you will ever run. The people typing it already know you and have decided to come. If a competitor is bidding on it, they are trying to intercept somebody at the last possible moment, and the way you stop that is to be present on your own name yourself.
Auction Insights will tell you who else is appearing on your terms, and it is worth looking before you assume nobody is. Plenty of owners discover the traffic they thought was safe has had a rival sitting above it for months.
The asymmetry is the point. Defending your own name is cheap and converts. Attacking theirs is expensive and does not. If you only have the appetite for one of those conversations, it should be the first one.
What to Do With All This
If you are going to try it, do it deliberately. Its own campaign, its own budget, a number you would not miss, and a defined period after which you look honestly at what it produced. Count the calls that were never yours to begin with, not just the cost per click, because the clicks are the cheaper half of the bill.
Most of the accounts we take over have competitor terms sitting quietly inside a main campaign, spending steadily, converting rarely, and dragging the reporting of every good keyword around them. Pulling them out and looking at them honestly is some of the least glamorous and most profitable work in a Google Ads account. If you would rather do it yourself, start by finding out which campaign those terms are living in right now.
