This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
Searching for Payola

The Federal Trade Commission, watchdog over deceptive consumer marketing practices, has thrown a spotlight on a number of big search engine companies. The agency is about to warn AltaVista, AOL, Direct Hit, iWon, LookSmart, Microsoft, and TerraLycos to come clean about the paid placements that appear with search results. The FTC began investigating last year after a complaint filed by Commercial Alert, a pro-consumer group founded by Ralph Nader.

SFGate writer Verne Kopytoff seems to have turned in the first story about the upcoming action, filing last Saturday. The rest of the press picked it up yesterday or today. Kopytoff (among other reporters) detailed some of the phrases with which search sites now distinguish (or fail to distinguish) paid placements from search results, including "featured listings," "recommended sites," "search partners," "products and services," and "partner search results." A number of outlets got a comment from Commercial Alert Executive Director Gary Ruskin. The Washington Post quoted his opinion that only Google (not named in the complaint) currently meets the FTC's disclosure guideline.

Many outlets pointed to a Consumer Union survey earlier this year that found that 60% of Net users were unaware that search engines do pay-for-placement, while 80% would consider disclosure of such a practice important. InternetNews noted that several search companies had changed the wording on their sponsored links, but all seemed eager to deny that the Nader complaint or the FTC letter had anything to do with the changes. Of course.

The Post's reporter interviewed a former FTC official who shed light how to read the agency's action. "I would take that seriously," he said; "I would not just brush it off." - Keith Dawson

Sites told to 'fess up (SFGate)

U.S. Warns Web Sites to Label Sponsorships

FTC Warns Search Engines on Ad Placements

Search engines mull ad changes (Reuters)

FTC turns screws on Payola search (ComputerWire)

FTC Warns Sites on Paid Listings