FTC: Search Engines Aren’t Doing Enough to Differentiate Ads From Organic Results

By Cameron Scott 

search engines, online advertising, FTC, federal trade commission, The FTC published a letter today that it sent yesterday to search engine companies, warning them that they were not adequately complying with its rules on differentiating paid search advertisements and organic search results.

Since it issued guidance in 2002, the commission said it has seen compliance with the rules decline. The commission has also been asked to update its guidelines that apply to Web businesses, it said.

U.S. marketers will spend roughly $19.5 billion on search advertising this year, according to eMarketer.

“Although the ways in which search engines retrieve and present results, and the devices on which consumers view these results, are constantly evolving, the principles underlying the 2002 Search Engine letter remain the same: consumers ordinarily expect that natural search results are included and ranked based on relevance to a search query, not based on payment from a third party … [C]onsumers should be able to easily distinguish a natural search result from advertising that a search engine delivers,” Mary K. Engle, the commission’s associate director for advertising practices, reminded the companies yesterday.

The letter went out to AOL, Ask.com, Bing, Blekko, DuckDuckGo, Google, and Yahoo, and 17 shopping, travel, and local business search engines.

The FTC pointed to vertical searches, such as Google Shopping, as areas of concern.

“Although sometimes specialized search is just another way of organizing and presenting a subset of natural results, in other instances, it is something different entirely. Sometimes the results returned as part of a specialized search are based at least in part on payments from a third party. If that is the case, it is also a form of advertising and should be identified as such to consumers,” Engle wrote.

Google Shopping has transformed itself from being an unpaid specialized search vertical to listing of paid advertisements in the last year. Although Google has made that shift clear in its corporate communications, the search interface does not identify the content as advertising.

The FTC also recommended that advertising appear on a shaded background and/or with a distinct border and that it include text identifying it as paid content.