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FTC Cracks Down on Search Engine Advertising Practices
FTC Cracks Down on Search Engine Advertising Practices

By Jennifer LeClaire
June 26, 2013 1:47PM

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"Over the past decade the industry has changed and so have the ways in which search results are presented. The mobile Internet didn't exist then, for example," said analyst Greg Sterling. "In many instances there has been a blurring of the distinctions between ads and non-ads in search." The FTC has warned Google, Yahoo and Microsoft about search ad practices.
 



The Federal Trade Commission has issued a strong warning to Google, Yahoo and Bing to "clearly and prominently" distinguish advertising from search results. The regulatory agency said it has seen the companies mixing results over the past decade.

In 2002, the FTC's Bureau of Consumer Protection published a letter -- widely known as the "2002 Search Engine Letter" -- advising search-engine companies about the potential for consumers to be deceived, in violation of Section 5 of the FTC Act, unless search engines clearly and prominently distinguished search-based advertising from other search results.

After that letter was issued, the FTC said, search engines embraced the guidance and distinguished paid search results or other advertising on their Web site. But the search engines have since loosened that embrace, the FTC said. Hence the new warning letter.

Avoiding Potential Deception

"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," said the FTC letter, signed by Mary K. Engle, associate director for Advertising Practices.

"Including or ranking a search result in whole or in part based on payment is a form of advertising. To avoid the potential for deception, consumers should be able to easily distinguish a natural search result from advertising that a search engine delivers."

The Evolution of Online Advertising

Greg Sterling, principal analyst at Sterling Market Intelligence, said he's not surprised by the letter, given the evolution in the online advertising landscape.

"Over the past decade the industry has changed and so have the ways in which search results are presented. The mobile Internet didn't exist then, for example," Sterling told us. "In many instances there has been a blurring of the distinctions between ads and non-ads in search -- vertical and general -- results in the intervening period."

As Sterling sees it, the FTC is trying to remind the industry that this division needs to be clearly maintained so as not to deceive or mislead consumers. The agency has enforcement power to penalize offenders, he said, and this letter is a warning to them to do more to clarify where advertising appears in their content.

"But this 'problem' extends beyond search on the Internet," Sterling added. "The whole phenomenon of 'native advertising' is a prime example of content and advertising blurring in many cases to the point of being indistinguishable."
 

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