Pay Per Click advertising is the only form of Internet Advertising that grew last year, it accounted for 57% of Internet Advertising in 2008, up from 52% in 2007 according to the Interactive Advertising Bureau.

According to a study conducted by Forrester Consulting 52% of internet users are found to respond to display advertising on ad-supported websites. 38% of people who respond to online display advertising learn about a brand for the first time as a results of their exposure to the advert.

However in May 2009 Hitwise data indicates a 26% decline in the share of paid clicks, this appears to be from the reduction of brands bidding on their own trademarked terms. Currently, registered trademark holders can request that Google prevent their trademarks from being used in ad copy. Although trademarks can still be used by anyone to trigger adverts, however last year Google lifted restrictions on using keywords as a trigger term for ads in the United Kingdom and later in Ireland.

Google has responded to this cutback in the USA and are now allowing branded keywords to trigger adverts in over 190 countries without allowing brands to protect their trademarks through Adwords Pay Per Click. Further more Google has confirmed that advertisers will be able to use brand trademarks in the ad copy of their adverts from June 15th in the US. It is only a matter of time before the same occurs in the UK.

There will be some restictions applied and adverters are only allowed to use brand terms if:

• The Pay Per Click advert uses the term in a descriptive or generic way, not as a reference to the trademark owner or the goods or services corresponding to the term.

• Advertisers must resale the trademarked goods, services, components, replacement parts or compatible products to use the trademarked term in a nominative manor.

• Informational websites will require the primary purpose of their website to provide non-competitive and informative details about the goods or services corresponding to the trademarked term. With the additional rule that the advertiser may not sell or facilitate the sales of the goods or services of a competitor to the trademark owner.

Many brand owners say the practice abuses their brands, confuses customers and increases their cost of doing business.

“I know of several companies spending millions of dollars a year in payments to Google to make sure that their company is the very first sponsored link” on searches for their own names, said Terrence Ross, a partner at Gibson Dunn, who represented American Airlines in its suit against Google. “It certainly smacks of a protection racket.”

But defenders of Google’s practice say it is good for consumers. People who are shopping for a new camera, for example, will benefit from seeing an ad for a competing, and perhaps cheaper, product that they might not have known about.

EU countries still has restrictions other than the UK and Ireland and a handful of other places, said Terri Chen, senior trademark counsel at Google. This is due to the French courts not being very supportive to Google in recent court cases.

Chen said Google didn’t feel it was the right time to make a change in most of the EU, but in the UK and Ireland, it was felt that trademark laws were more similar to the US. That is, designed to protect against consumer confusion (and thus more permissive) than in France where they are seen as almost protecting property rights.

These changes will support online retailers that advertise the products and brands they sell online. Hopefully Google UK will take up these changes sooner rather than later so online retails can once again fully support and sell their products.