Last week, Google announced a major change in their policy regarding the usage of trademarks in AdWords. With effect from June 15th, they will allow certain categories of advertisers to not just buy keywords containing trademarked terms, but also to include those trademarks in their advertisement text.

This new policy has an official explanation, a more-likely-but-unofficial explanation and a whole bunch of stakeholders in the AdWords process who are going to be affected.

First the official explanation. Google says that they have finally come to realize that people reading an AdWords ad may be confused if they specifically search for a brand name but then can’t see it in the ads with which they are presented:

Imagine opening your Sunday paper and seeing ads from a large supermarket chain that didn’t list actual products for sale; instead, they simply listed the categories of products available – offers like “Buy discount cola” and “Snacks on sale.” The ads wouldn’t be useful since you wouldn’t know what products are actually being offered. For many categories of advertisers, this is the problem they have faced on Google for some time.

Google calls this situation one in which “overly generic ads” are being served, and suggest that their new policy is designed to provide users “with more relevant information” while still protecting trademark owners.

The reality behind this decision, and especially the reason it has been made now, is that Google wants to boost their ad revenue after the first quarter ever in which they booked less business than the quarter before. Allowing trademarks in ad-text will make trademark keyword bidding much more effective and therefore competitive, pushing up bid prices and ad density.

While Google are doing better than any of the other big four – Yahoo, AOL and Microsoft – they are clearly still feeling the pinch. Their change in trademark policy may be seen as a direct result of the Great Recession impacting even the most powerful of companies.

For other stakeholders this is a mixed bag. Trademark holders will probably hate it. They used to be able to provide a white-list of approved sites that could bid on their trademark and that provided a fair amount of protection. Now, they’re going to have to not only police trademark abuse themselves, but they will also face increased competition for their own keywords, and response to both their own and their reseller’s paid search ads will be diluted.

For publishers and affiliates the picture is more rosy. They have always been able to buy trademark-based keywords but were unable to then place the trademark within their ad text. That now changes, meaning that the ad copy will be more relevant to the search, and more relevance equals more clicks.

The bottom line? Affiliates win. Trademark owners lose. And Google, as always, will make more money.