I think it's the same problem even if it looks more suspect.

I think the important thing here is that companies don't decide to increase total advertising budget just because of the existence of a new channel. They have a budget of X. They have to decide how to break it up. Google, with brand targeting in search, is making a play for money that would've otherwise gone to Fox or ClearChannel or whoever. The brands redirect some budget to this new channel, as it shows its effectiveness.

Many of them still spend some on traditional channels, to get that first appeal and be the "Williams Sonoma" in "Williams Sonoma Cast Iron Skillet." Many of those people aren't just going to click through to Lodge ads instead. But less than they did when traditional channels were the only game in town.

Same dilemma, though:

If nobody advertised in Google Search or non-Google channels, people would just buy whatever skillets they found in whatever stores they found, or what their friends told them about.

If one brand advertised in offline media, more of those people would buy that brand.

So all brands advertise in offline media. And then it comes down to effectiveness of the campaigns + the same criteria that it would've otherwise - availability/placement, word of mouth, etc.

Then, if only one brand advertised in search targeting other brand names too, more of those people would buy that brand.

So all brands advertise on their brand keywords in search.

But ultimately it's the same game in both places. With the same net, Google just captures some spend that what would've gone to non-Google places previously.

Exactly. Big difference between

"Williams Sonoma Cast Iron Skillet"

and

"Cast Iron Skillet"