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Paid Search’s Disclosure Issues

  |  April 15, 2005   |  Comments

The best regulation is Darwinism combined with user experience.

A hot topic in search engine marketing (SEM) concerns the level of disclosure surrounding paid placement and paid inclusion (PI) ads. These textual ad links generate in excess of $4 billion in annual revenue for search engines. Some argue text ads and paid links should be disclosed more prominently. Others feel the current level of disclosure is sufficient and relevancy is the key. Currently, disclosure among the top search engines is as follows:

Engine Paid Placement Identification
Google Sponsored Links
Yahoo Sponsor Results
MSN Sponsored Sites
AOL Sponsored Links
Ask Jeeves Featured Sponsor; Sponsored Web Results
Teoma Sponsored Link
Iwon.com Featured Sponsor; Sponsored Listings
Excite Sponsored By: [precedes URL in the SERP”

Only Yahoo accepts paid inclusion feeds (XML PI); both Yahoo and Teoma still offer per-URL paid inclusion. Yet neither labels listings as sponsored because, at least in theory, other than more frequent spidering (or inclusion) and a bit more control over content, PI doesn’t provide marketers any ability to influence position. Yet marketers using XML PI can remain well within editorial guidelines and influence position in comparison to what a spider would have found, had it reached the XML-represented page. This holds particularly true if the page was poorly constructed with bad HTML and lacks a unique title.

Each engine will fairly rapidly reach its own optimal level of disclosure. I’ll explain why below. Third parties, including the FTC and Ralph Nader’s CommercialAlert, have shown an interest in SERPs (define), and paid listings in particular.

Discussions both external and internal to the industry presuppose nonpaid listings are somehow objective, pristine, and untouched by human manipulation. Any organic SEO (define) professional will tell you otherwise. Yet recently, Consumer Reports WebWatch stated:

Many of the Web’s top search engines have made improvements in disclosure and transparency -- describing their business relationships with advertisers and how those relationships may or may not affect the objectivity of search content and results.

The statement presumes algorithmic objectivity is somehow superior.

It isn’t completely clear why Consumer Reports has suddenly taken an interest in SERPs. I’m concerned there’s a foregone conclusion and bias in the way it’s approaching the subject. It’s a watchdog group, serious about its mission. Its mission statement reads:

  • Provide unbiased and practical research on Web site publishing and business practices; help devise guidelines for credibility; expose practices that are a cause for consumer concern; and recognize good practices.

  • Promote consumer awareness of important issues on the Web that relate to our mission.

Consumer Reports Web Watch will holding a conference in June, "Trust or Consequence: How Failure to Disclose Ad Relationships Threatens to Burst the Search Bubble." The tile indicates a clear agenda: improved disclosure of paid search advertising. The event follows the sensational report, "Searching for Disclosure," released last fall.

These external reports miss SEM’s self-regulating industry economics as well as those of the search engines. Look at the rise in Google’s market share over the last four years. With zero consumer advertising, Google is number one. This is due to a better overall user experience. The search engines are battling for market share, and any poor (or even inferior) user experience results in defection. Losing highly valuable users means a huge loss in potential revenue.

A Darwinian elimination of weaker players and the rise of the stronger ones assure the user experiences improves every year. Even Google has fallen prey to this effect, as more and more late-stage shoppers use Shopping.com, PriceGrabber.com, NexTag, BizRate, mySimon, and others. Many of these new shopping engine users likely found those engines through some combination of paid and organic search. User behaviors in respect to search engine preferences change quickly, as other trends evolve over months and years.

Marketplace self-correction in terms of paid listing relevancy occurs even faster than changes in user behavior and preferences. In Yahoo, listings are reviewed by editorial staff before going live. In Google, listings are spot-checked, then Google’s AdRank algorithm takes over. It automatically penalizes ads with poor CTR (define) as insufficiently relevant. Darwin saves the day again. Searchers, acting as a bloc, assure future searchers will have a better user experience. This happened very quickly in Google. Yahoo Search Marketing’s (formerly Overture) Click Index serves the same purpose.

Could better disclosure build trust more quickly between a search engine and its users? It wouldn’t hurt. But nothing builds trust better than a great user experience. Google is already a trusted brand. It achieved that trust through experiential branding. Every engine is forced to find its own balance between relevant paid listings (paid placement or PI) and relevant organic listings. Failure to do so is a death warrant, and there have already been some fatalities in the search engine world.

Meet Kevin at Search Engine Strategies in Toronto, Canada, May 4-5, 2005.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.


Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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