Google, Other Search Engines Put on Notice by FTC About Online Ad Labels

The FTC is reminding search companies that online ads must be clearly marked as sponsored to prevent consumer deception, in compliance with 2002 laws.

The U.S. Federal Trade Commission is going after search engine companies such as Google, Yahoo, Bing and others to remind them that all sponsored online advertisements in search must be clearly marked or delineated as paid ads to avoid any deception of consumers.

The FTC's Bureau of Consumer Protection had established such rules back in 2002, but a reminder effort is being made now because the FTC has "observed a decline in compliance," according to a June 24 letter issued by the agency.

The 2002 letter advised search engine companies "about the potential for consumers to be deceived, in violation of Section 5 of the FTC Act, unless search engines clearly and prominently distinguished advertising from natural search results," the agency reports. "After the 2002 Search Engine Letter was issued, search engines embraced the letter's guidance and distinguished any paid search results or other advertising on their websites."

Because of the prevalence of mobile devices and other new ways for consumers to conduct searches, things have blurred and backtracked somewhat, the agency reported. That's where the call for a renewed focus on labeling of online advertisements as paid ads comes into play.

The five-page letter, from Mary K. Engle, the FTC's associate director for advertising practices, does not name any particular search engine vendors, but has been sent to Google, Yahoo, Microsoft's Bing, AOL, Blekko, DuckDuckGo and 17 other specialist search engines, according to a June 26 story by The Guardian.

"Although the ways in which search engines retrieve and present results, and the devices on which consumers view these results, are constantly evolving, the principles underlying the 2002 Search Engine letter remain the same: consumers ordinarily expect that natural search results are included and ranked based on relevance to a search query, not based on payment from a third party," states Engle's letter. "Including or ranking a search result in whole or in part based on payment is a form of advertising."

To avoid such possible deception, "consumers should be able to easily distinguish a natural search result from advertising that a search engine delivers," the letter states. "In recent years, the features traditional search engines use to differentiate advertising from natural search results have become less noticeable to consumers, especially for advertising located immediately above the natural results ('top ads')."

Another change that's come over the past several years from search vendors is that "many general search engines now often integrate or offer specialized or vertical search options as part of their search service," according to Engle's letter. "This allows consumers to narrow their search to particular categories of information, such as news, images, local businesses, or consumer goods." The complication with that, she wrote, is that "sometimes the results returned as part of a specialized search are based at least in part on payments from a third party. If that is the case, it is also a form of advertising and should be identified as such to consumers."

To ensure continued adherence with the 2002 search rules, the FTC recommends that search engine companies take several steps to maintain compliance, wrote Engle. The steps include clearly identifying sponsored, paid ads in search using prominent, contrasting shading or other means to make them stand out as paid, as well as text labels that clearly mark such ads in search.

"In addition to the visual cues a search engine may use to distinguish advertising, it also should have a text label that: (1) uses language that explicitly and unambiguously conveys if a search result is advertising; (2) is large and visible enough for consumers to notice it; and (3) is located near the search result (or group of search results) that it qualifies and where consumers will see it," the letter states.