The Marketleap Report
Vol. 1 - Issue #16 - August 3, 2001

Search No Further
Paid placement comes under fire
by Keith Boswell

Search engines help make sense of the web. Their influence on Internet users ranks second only to e-mail in terms of pervasiveness. If you use the web, you use search engines. As dot-com advertising continues to dry up, search engines must find alternative ways to sell ad space.

Three revenue opportunities now exist in the search engine world. Paid placement represents banner ads and other ads that exist outside of the editorial space or content space on a search engine page. Some search engines now use vertical sidebar ads that take up most of the page because they provide more space to the advertiser. Ad buying in this manner continues to shrink as the pool of potential advertisers shrinks.

Another form of advertising for search engines goes by the name of paid inclusion. This model delivers a text ad within the editorial space. Some of the big search engines like MSN and AltaVista use paid inclusion to highlight advertisers within search results. To the end user, the text ad may look the same as another search result; only it is at the top of the list.

A paid submission represents a third revenue opportunity for search engines. With this service, search engines guarantee that a site will get listed within their search results as soon as possible. Sometimes this even means that the site will receive a higher listing than an unpaid submission, even if the unpaid listing is more relevant.

Last week, these revenue streams came under attack when the Federal Trade Commission filed a complaint on behalf of a group called Commercial Alert (http://www.commercialalert.org/). Founded by consumer activists including Ralph Nader, Commercial Alert acts as a consumer watchdog organization.

The complaint alleges that MSN, Netscape, DirectHit, Hotbot, Lycos, AltaVista, LookSmart and iWon all use paid ads in their search results without clearly labeling them as paid results from an advertiser. The complaint asserts that users are being misled to believe that their search results are based on relevancy like an objective database searching from an objective algorithm would provide. Instead, some of these results are advertisements.

"These search engines have chosen crass commercialism over editorial integrity," said Gary Ruskin, the executive director of Commercial Alert. "We are asking the FTC to make sure that no one is tricked by the search engines descent into commercial deception. If they are going to stuff ads into search results, they should be required to say that ads are ads."

Not all search engines are guilty of this misrepresentation. Google, the web's most popular search engine, labels all paid placements as "Sponsored Links" and it never places text ads within search results.

In an interview with SearchEngineWatch.com, a Google spokesperson spoke to the matter. "We have no plans for a paid inclusion program. As we've stated in the past, our search results represent our editorial integrity, and we have no plans to alter our automated process, which works very well in gathering information and delivering highly relevant results."

Frequent web users have come to think of search engines much like librarians. They should provide an unbiased slice of the information we are looking for. Google has clearly stated its intention to maintain its users trust, but many search engines depend on paid advertising to survive. The real issue becomes how those ads are represented to the end user.

Hiding the ad within content that a user may believe to be a valid, and unbiased result seems wrong. Clearly labeling an ad helps the consumer benefit from exposure to products it may find valuable without confusing their desired results. It strikes the right balance between advertising and integrity. As search engines become more valuable in pointing the way in the vast Internet, users need confidence that their online experience won't be sold to the highest bidder.

report@marketleap.com.