FTC: Disclose Paid Search Listings

By: D. Ian Hopper, AP Technology Writer

(AP) Internet search engines that take money from Web sites in exchange for prominent placement should make that practice clearer to Web users, federal regulators said Friday.

Many search engine Web sites, including AltaVista, LookSmart, and AOL Search, give preferred placement to paid advertisers. The Federal Trade Commission said that prime space can confuse Web users who are looking for the best response to their search, rather than ads for sites that paid up front.

The commission’s decision came in response to a complaint from consumer advocacy group Commercial Alert, which is backed by activist Ralph Nader. Gary Ruskin, executive director of Commercial Alert, said his group is “defending the advertising-editorial line from the aggressive commercialism of corporate advertisers.”

“When the search engines show that ads are ads, we’re hoping consumers will flee these search engines,” Ruskin said.

While the FTC said it doesn’t plan to file suit against the search engines, it will send a letter to each calling for “clearer disclosure of the use of paid inclusion, including more conspicuous descriptions of paid inclusion itself.”

The FTC said it will send the letter to AltaVista, AOL Time Warner, Direct Hit Technologies, iWon, LookSmart, Microsoft, and Terra Lycos.

Since Internet advertising dollars started becoming scarce two years ago, sponsored links have become popular among search engines. But they are not always clearly marked.

For example, a search on AltaVista for “wine” will result in four links at the top of the results under the heading “Products and Services.” In tiny letters, without an underline that is customarily used in Web links, is the word “info.” If a user clicks “info,” AltaVista said the links were “reviewed by editors” for their relevance. Only later in the disclosure does AltaVista admit they are paid advertisements.

All of LookSmart’s search results are paid links, ranked by how much the company paid for the listing. But nowhere on the page is there a clear disclosure that the links were purchased.

An AltaVista spokeswoman said they have not yet received the FTC letter, and declined to comment on the disclosure of paid links. Neither LookSmart nor Microsoft immediately returned calls seeking comment.

AOL spokesman Andrew Weinstein said AOL and Netscape, an AOL property, have adopted the term “Sponsored Link” to flag paid ads in search results. Weinstein said the company changed its policy after the complaint. The same language is used by search engine Google, which Ruskin praised in his FTC complaint.

A recent survey by Consumers Union found 60% of Internet users polled had no idea that certain search engines were paid fees to list some sites more prominently than others.

The FTC said search engine companies should clearly distinguish between paid and non-paid results. Regulators said there is no determination the search engines broke the law, and it plans no other action.

Commercial Alert: http://www.commercialalert.org
Federal Trade Commission: http://www.ftc.gov
AltaVista: http://www.altavista.com
LookSmart: http://www.looksmart.com

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