Buying Google AdWords against competitors: A good sign for Southeast Asia, so learn to deal with it

The startup community in Southeast Asia is up in arms over Rocket Internet again. This time, it’s about their perceived unethical bidding of keywords and placement of ads to siphon from competitors to their own websites.

In Indonesia, Zalora was “caught” buying Google AdWords against smaller rival Below Cepek, although the Rocket Internet company later retracted the ads and issued a vague apology.

In Singapore, Zalora engaged in a similar practice against online cosmetics store Luxola, and the campaign was even extended to multiple countries in the region.

Since the issue was brought out into the open, however, Zalora seemed to have tweaked its approach:

Before. Screencapped by TechinAsia.

After.

In Southeast Asia, this tactic has in fact been practiced under-the-radar for a few years. Since 2011, Philippine daily deal sites Ensogo and Metrodeal were found buying ads on the search result pages for CashCashPinoy and Deal Grocer, and the campaigns are ongoing even now:

Metrodeal on CashCashPinoy’s search result page.

Ensogo on Deal Grocer’s search result page.

So it’s not just Rocket Internet that’s doing it. The practice is so common worldwide that there’s a term for it: Competitive Keyword Advertising. It’s controversial for sure, and battles have been fought in courtrooms to settle scores, but often with cruel results for trademark owners.

The root of the unhappiness stems from how small business owners are disadvantaged against larger counterparts. Google AdWords placements work through a bidding process, which means bigger players have the upper hand due to their financial muscle. It’s no level playing field when smaller competitors don’t have the wherewithal to outbid the likes of Rocket Internet.