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Luxola vs Zalora: Is it Ethical To Buy Google Keyword Ads on Competitors’ Names?

luxola

Anyone in the internet industry in Asia must have heard of e-commerce sites Luxola and Zalora. Now these two companies are fighting head on in what it looks like a keyword ads battle on Google’s search results page.

Look at the screenshot above and you will find Zalora’s ads when a user searches for ‘Luxola’. That’s not all, there’s even a subdomain for Luxola (luxola.zalora.com) on the Zalora site. It feels like Zalora is playing some jackass keywords bidding tactic game to trick Luxola users to its sites.

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Alexis Horowitz-Burdick, co-founder of Luxola, noticed Lazada and Zalora displaying ‘Luxola’ keywords ads around mid-April in Malaysia. And then it went on to extend to Singapore, Indonesia, Malaysia, and Thailand. Alexis emailed Zalora’s Lazada’s CMO Stein Jakob Oeie who replied:

We are not in breach of Google’s policy here as it does not cover display URL. I understand your frustration but these campaigns actually work very well for us.

Sure, Zalora didn’t breach any policy. Several Forbes’ articles also seem to suggest so too. Even though Luxola is a trademarked name, it may not win the case if both companies were to go to court.

But I can’t help but feel a sense of injustice here. Now let me highlight what Stein said, “These campaigns actually work very well for us.” That seems to suggest that Luxola isn’t the only startup that is facing keywords pressure from the Rocket Internet guys. My moral compass tells me that this isn’t right. After surveying many experienced entrepreneurs across the region (who all agree that this is a jackass move), I understand it is actually quite common. Usually a simple ceasefire email should suffice. But this isn’t the case for Zalora which continued to roll out its Adwords campaign that targets Luxola. Alexis notes that it has caused a drop in Luxola’s traffic; she tells me:

We have lost a small amount of traffic which is unfortunate […] We continue to try and educate our customers through social media that Luxola is in no way affiliated with Zalora or Lazada. We also continue an aggressive, but above board, search engine marketing (SEM) strategy for the region as we prefer to win on the merits of our platform and not the confusion or misunderstanding of potential customers.

Rocket Internet declined to comment on this matter when we reached out to them.

While I understand that this is business and competition, I do believe that the battle could be fought in many different ways, for example by focusing on better products and customer service. Tricking users who wish to go to Luxola into visiting Zalora doesn’t really make sense.

If you agree with me, please tweet a note to @ZaloraSingapore. Maybe the community’s combined voices will get Zalora to switch off its ‘Luxola’ targeted ads. And if you don’t feel that way, tell us why in the comments.



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