Wednesday, June 13, 2012

Danny Sullivan on Search Engine Disclosure Compliance


 Gasta.com adapted paid inclusion since its origins in 1998. below Danny Sullivan once the man who heralded Google now bemoans the fact that Google is adapting paid inclusion and re-writing the rule book as it goes along!

A Letter To The FTC Regarding Search Engine Disclosure Compliance
Jun 10, 2012 at 1:37pm ET by Danny Sullivan

In 2002, the US Federal Trade Commission created guidelines on how search engines should disclose paid placement and paid inclusion listings. It’s become clear to me over the past two weeks that the search engine industry has either largely forgotten these guidelines or is ignoring them. That’s why I’ve written a letter today to the FTC asking that the agency conduct a compliance review, as well as a review to see if its guidelines should be updated. My letter is below.
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US Federal Trade Commission
Attn: Chairman Jon Leibowitz; Bureau of Consumer Protection, Division of Advertising Practices; Office of Public Affairs
Dear Chairman Leibowitz, The Bureau of Consumer Protection & The Office of Public Affairs
In 2002, the US Federal Trade Commission created guidelines for search engines regarding disclosure of paid placement and paid inclusion listings. As a journalist who has covered the search engine space since 1996, I’m finding that the agency seems to be failing to properly enforce these guidelines. I’m asking for the FTC to conduct a review of the current state of compliance, so that I might report on your official findings. I’d also like to understand if the agency, after conducting such a review, feels that the guidelines need to be updated, expanded or amended in any way.
I know the history of how the disclosure guidelines were created well. I was cited in the Commercial Alert complaint that was filed in 2001, which triggered the FTC to conduct its initial review. I reported on both your response to Commercial Alert and the guidelines that came out of that response.
While I’ve never forgotten those guidelines, it appears that the search engines that I cover have. Recently, I wrote about the growth of paid inclusion programs at Google, a company which in the past had fiercely opposed such programs. The FTC didn’t oppose paid inclusion; that was Google’s own choice. But now that Google has adopted paid inclusion, apparently to avoid embarrassment, it gave me its own, new definition of paid inclusion:
Paid inclusion has historically been used to describe results that the website owner paid to place, but which were not labelled differently from organic search results.  We are making it very clear to users that there is a difference between these results for which Google may be compensated by the providers, and our organic search results.
That is not how I recall Google or the search engine industry in general having historically described paid inclusion. It’s not how the FTC itself described it, within its own guidelines. If I’m going to report on paid inclusion and disclosure compliance, I’d like the FTC to reassert its own definition, rather than the largest search engine in the United States unilaterally declaring definitions of its own.
In another example, last Friday, the CEO of Nextag Jeffrey Katz wrote a widely-cited opinion piece in the Wall Street Journal taking Google to task over his belief of a failure of disclosure. Katz wrote in part:
Most people believe that when they type “convection microwave oven” or “biking shorts” into Google, they will receive a list of the most relevant sites. Not true. That’s how Google used to work. Now, when someone searches for these items, the most prominent results are displayed because companies paid Google for that privilege….
Google needs to be transparent about how its search engine operates. Today Google hides behind forked-tongued gobbledygook that is meant to obfuscate. Google should disclose, clearly and in plain English, when advertisers receive better placement in search results….
In reviewing his opinion piece, I detailed how Nextag itself doesn’t appear to disclose paid inclusion as required by the FTC, guidelines that are applicable to all search engines, as I was told by the FTC as the time they were created
The idea that a CEO could pen a letter about a competitor’s supposed lack of consumer transparency without a concern that his own company doesn’t follow your guidelines suggests that those guidelines either aren’t taken seriously by some in the search engine industry or aren’t considered applicable to them. I’d like the FTC review to address this.
When the guidelines were drafted, the concern was that consumers might not know what was paid for or not within search engines and assume everything was listed without payment being a factor, since that’s how search engines had historically operated. Compliance with paid placement listings generally seems good. But when it comes to paid inclusion, which was always the trickier issue, compliance seems to be poor.
The FTC never addressed the issue of content promotion, what search engines should do when they promote their own content. That might be a new guideline that should be issued and perhaps one essential to the ongoing anti-trust review of Google.
Some Google competitors like to make out that when Google integrates vertical search results that this is somehow unfair favoritism rather than operating as a search engine should operate and despite the fact that competitors may operate the exact same way.
Now that Google is turning former search engines like Google Product Search into paid inclusion/advertising products like Google Shopping, the definitions are even more important — and not just for the handful of competitors claiming an issue with Google but for the millions of consumers that use these search engines sometimes without clear disclosure of why they get certain results.
The commission may also wish to ponder if the guidelines should be extended to hardware and software manufacturers as well as broadband and wireless providers, all of which may cut deals deciding which search engine will be the default on their devices, programs and operating systems. Consumers may not understand that payment was involved in the choice made for them and may find it difficult to impossible to change, such as seems to be the case with the search engines used by default with Google’s Galaxy Nexus phone or Apple’s iPhone 4S.
I understand that the FTC has been mostly involved at late investigating whether consumers are being harmed by possible anti-competitive actions of Google. However, the FTC also has a role in protecting consumers from misleading and confusing advertising across all search engines. A review of your guidelines would be especially helpful given changes in the space now and perhaps necessary for any proper anti-trust review you’re doing.
I would be happy to speak further with anyone from the commission on this matter.
Danny Sullivan, Editor In Chief, Search Engine Land
Appendix
Below is a small appendix designed to better illustrate some of the complexities and the current situation of paid placement and paid inclusion disclosure. It’s based on a light review of some of the major general purpose search engines in the United States, some selected vertical search engines that are member companies of FairSearch, which espouses that consumers benefit when search engines are “displaying results transparently,” and Nextag.
Google: The company generally seems to label its paid placement ads and keeps them distinct from editorial content. Depending on the monitor you use, the color used to highlight and separate ads from editorial content might be hard to discern (as is the case for me with a 2010 MacBook Pro, while on a 2011 MacBook Air, they are very distinct).
Paid inclusion is disclosed through new Sponsored boxes. However, people might go directly to the vertical search engines that power these boxes, where disclosure might be lacking. For more on this, see Once Deemed Evil, Google Now Embraces Paid Inclusion.
The company has deals to distribute its search results by partnering with browser vendors, hardware manufacturers, broadband and wireless providers. These might fail to disclose why Google was made a choice or that they receive money because of this.
Bing: The service generally seems to label its paid placement ads and keeps them distinct from editorial content. Depending on the monitor you use, the color used to highlight and separate ads from editorial content might be hard to discern (as is the case for me with a 2010 MacBook Pro, while on a 2011 MacBook Air, they are very distinct).
Paid inclusion is not disclosed inline with the main search results at times. For example, a search for “dvd players” brings up a shopping box with nothing explaining that some vendors may appear because they’ve paid for inclusion.
Using the Bing Shopping site directly, the results also lack any disclosure. The Help page simply says: “Shopping around online has never been easier! Search for popular products at online stores, and learn instantly who has the lowest price.” But the page designed for merchants (rather than consumers) explains that getting listed through Bing’s partnership with Shopping.com means “Paid offers will be highlighted throughout Bing Shopping, including search result and product pages.”
The service has deals to distribute its search results by partnering with browser vendors, hardware manufacturers, broadband and wireless providers. These might fail to disclose why Bing was made a choice or that they receive money because of this.
Yahoo:  The service generally seems to label its paid placement ads and keeps them distinct from editorial content. Depending on the monitor you use, the color used to highlight and separate ads from editorial content might be hard to discern (as is the case for me with a 2010 MacBook Pro, while on a 2011 MacBook Air, they are very distinct).
Paid inclusion is not disclosed inline with the main search results at times. For example, a search for “dvd players” brings up a shopping box with nothing explaining that some vendors may appear because they’ve paid for inclusion.
Using the Yahoo Shopping site directly, the home page simply says “Information about prices, products, services and merchants is provided by third parties and is for informational purposes only. Yahoo! does not represent or warrant the accuracy or reliability of the information, and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.”
The main help pages talking about Yahoo Shopping explain nothing about possible paid inclusion, simply saying, for example, “Yahoo! Shopping Search helps you find the right product at the right price by giving them the most relevant product listings for a keyword query. Our search enables you to find millions of items from thousands of merchants, so you can locate, compare, and buy just about anything.”
One help page about “Product Pages” within the service does say, “Product Pages generally include merchants that are affiliated with Yahoo! Shopping or have other financial relationships with Yahoo!. In addition, merchants with their logo displayed or with their name in bold text appears higher in the comparison grid because they’ve paid for enhanced placement.” The page for merchants seems to indicate that Yahoo Shopping operates on a paid inclusion basis.
Yahoo has deals to distribute its search results by partnering with browser vendors, hardware manufacturers, broadband and wireless providers, among others. These might fail to disclose why Yahoo was made a choice or that they receive money because of this.
Ask:  The service generally seems to label its paid placement ads and keeps them distinct from editorial content. Depending on the monitor you use, the color used to highlight and separate ads from editorial content might be hard to discern (as is the case for me on both a 2010 MacBook Pro and on a 2011 MacBook Air).
Paid inclusion is not disclosed inline with the main search results at times. For example, a search for “dvd players” brings up a a “Amazon.com results” box that is probably appearing because of a paid inclusion deal with Amazon.
A “Shopping results” box from Ask itself appears at the top of the page, with nothing explaining that some vendors may appear because they’ve paid for inclusion. Using the Ask Shopping site directly, the home page has no disclosure information, nor does the help page immediately reveal any. In fact, nothing I can find even explains to merchants that paid inclusion listing come from Pronto.com, which is owned by Ask’s parent, IAC.
Ask has deals to distribute its search results in a variety of ways. These might fail to disclose why Ask was made a choice or that they receive money because of this.
Nextag: See Given Nextag’s Lack Of Transparency, Its WSJ Opinion Piece Asking For Google Transparency Isn’t Wise for a detailed review about how Nextag seems to fail to provide proper paid inclusion disclosure.
Twenga: The service generally seems to label its paid placement ads and keeps them distinct from editorial content.
The company doesn’t appear to use paid inclusion, and the help page is very clear about this saying:
“The offers from every online shop listed by Twenga are catalogued completely objectively. They are organised by product category, price, brand and by other details specified by you, the user. When you search for a product, the offers that match your keywords are displayed [sic] n order of popularity by default, but you can easily sort your results by relevance and price (high or low). In every instance, the search results are based on the criteria of Twenga users, which is why we call it organic listing.”
It also says:
“Twenga relies on advertising and business partnerships which give interested companies and retailers greater visibility than that provided by organic listing. Advertisements and sponsored links appear in designated areas, clearly separate from other results. Any commercial link Twenga may have with a merchant does not affect its position in the database nor in the natural search results.”
TripAdvisor: ”Sponsored links” seems to be the label used for some paid placement ads, and these are kept distinct from editorial content. However, TripAdvisor has a variety of ad units that might not make clear that these are ads, such as “Special Offers” that are only special to the degree that someone can pay to “appear at the top of your area’s list of accommodations, regardless of your actual TripAdvisor ranking — giving you the edge over local competition.”
Paid inclusion seems likely at TripAdvisor, but it’s hard to discern if it’s happening. The home page has text at the bottom saying merely: “TripAdvisor® features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages, travel guides, and lots more.” There’s also text to reassure consumers that they aren’t charged for using it but not explaining that TripAdvisor may receive paid inclusion fees: “TripAdvisor LLC is not a booking agent and does not charge any service fees to users of our site. The main help area lacks any disclosure.
Related Reading
The articles below have more information on some of the topics I’ve addressed, which I believe would be especially useful for those at the commission trying to make decisions about both competitive issues and consumer disclosure.

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