Search engines own up to paid-for results

By Stefanie Olsen

The commercial practices of search engines are in the spotlight after a recent warning shot from US federal regulators over inadequate disclosure of paid links.

The Federal Trade Commission (FTC) sent a letter late last month urging several websites to provide conspicuous labels for commercial search listings or face possible action. Minor changes are already rippling through search destinations, including America Online, Ask Jeeves, LookSmart, Microsoft's MSN and Terra Lycos.

But the reforms are unlikely to go beyond relabeling, at least for now, leaving untouched the myriad arrangements that have transformed many search engines from web library catalogues to the online equivalent of the Yellow Pages.

"Everything is for sale," said Dana Todd, founder of interactive agency SiteLab. "As a consumer, I'm appalled; as an advertiser, I'm delighted."

The tug-of-war over search engine marketing comes as advertisers increasingly turn to the technology as one of the most effective ways to reach their target audiences on the internet - a trend that has been eagerly embraced by websites that have seen other forms of ad sales wither.

The trend has raised concerns that the public might be misled about the editorial independence of search listings, which have frequently been promoted as unbiased research tools.

At the centre of the controversy are two commercial schemes offered by search providers: paid placement and paid inclusion (see 'Silicon Says' box, left).

The latter is less well-known than the former, but both are being heavily exploited by search engine outfits, but in response to the growing concerns over commercial interference, some have recently changed the way they present search results, a move welcomed by many industry observers.

Gary Ruskin, executive director of Commercial Alert, called the changes a boon to consumers.

"Many of these search engines have near zero editorial integrity," Ruskin said. "If (listings) are for sale, the public ought to know. Then they are not search engines but ad delivery mechanisms."

In the future, analysts say, paid inclusion could become the subject of further inspection.

"The issues are very complicated and the FTC has brought us closer to some clarity," said SearchEngineWatch's Sullivan. "But it may very well be a first step."

Stefanie Olsen writes for News.com