It comes up in almost every strategy meeting: "Let's run ads on brand X's name and take their traffic." The idea looks attractive — harvesting demand the competitor spent years building, at a cost per click. Let me settle the legal frame in one sentence first, then get to the real subject; because the real subject isn't law, it's arithmetic.
The short legal frame
Under Google's global policy, bidding on a competitor's brand keyword is generally permitted; restrictions begin with unauthorised use of a registered trademark in ad copy, enforced upon the owner's complaint. Unfair-competition law adds country-specific limits, and claims of misleading practice can arise in various jurisdictions. So the answer to "can it be done?" is, in most markets, "yes, carefully" — but I'm writing this wearing the budget-owner's hat, not the lawyer's. (Get legal advice for your own case; this article isn't it.)
The invisible lines of the cost sheet
Line one: the relevance penalty. When you show on a competitor's name, your ad's relevance to that query is structurally low in the system's eyes — the user searched for X, you are Y. Low expected CTR means low quality score means high CPC: you pay a multiple of what the competitor pays on its own name. Line two: intent mismatch. A brand-searching user is a bottom-of-funnel user — of that brand's funnel. Telling someone who has largely decided "actually, buy us instead" is one of the lowest-converting forms of persuasion. You buy the click dearly and see the conversion rarely. Line three: retaliation. The competitor sees what you're doing (your ad sits right on their monitoring screen) and answers in kind. The result is a spiral in which both sides must spend defensive budget on their own brand searches — traffic that used to be nearly free: two losers, one winner (the platform running the auction).
The narrow scenarios where it works
To be fair, there are cases where competitor bidding is rational. For a challenger entering a market, competitor searches can be the only place where the category's demand gathers — with zero awareness, an "alternative to X" positioning is an expensive but fast introduction channel. Moments when users actively seek alternatives also qualify: queries like "X complaints", "X price", "X vs" carry far higher switching intent than pure brand searches — and in my view the real target of a competitor strategy is not the brand name itself but these comparison queries. And there's the defensive scenario: if competitors are bidding on your name, a low-cost protection campaign on your own brand is usually a necessity — insurance, not attack.
My decision frame
When the competitor-bidding proposal arrives, I ask three questions. One: what's this budget's opportunity cost? If the same money buys cheaper conversions on our own category's generic or comparison queries — and it usually does — the debate ends there. Two: what will measurement show? A competitor campaign must be judged on conversions and post-conversion quality, never on clicks; "we got traffic" doesn't count as success in this game. Three: are we ready for retaliation? If our own brand search carries a large share of total conversions and that traffic is currently cheap, any move that makes it expensive needs a very explicit risk-return calculation. Few competitor campaigns pass all three questions — and those that do usually pass as "comparison query" campaigns, not "brand name" ones.
In short: competitor-brand advertising is rarely the right move — not because it's forbidden, but because in most scenarios it's expensive and low-yield. When forced to choose between tactics that feel cunning and the calculator, choose the calculator.