Online Search Engines Lack Full Disclosure About Advertiser Relationships to Search Results, Study Finds

New Research from Consumer Reports WebWatch Identifies Lapses Among Search Engines in ComplianceWith FTC Guidelines; ‘Paid Inclusion’ a Problem

November 8, 2004, YONKERS, N.Y. -- Consumer Reports WebWatch released new investigative research today reporting that many of the World Wide Web’s most popular search engines still do not provide clear disclosures about how their results can be influenced for a fee by advertisers, a practice called "paid placement," and even fewer explain how companies pay to increase the likelihood their names will appear in searches, a practice called “paid inclusion.” The new report is available in PDF format at http://www.consumerwebwatch.org/dynamic/search-web-ethics-in-search-of-disclosure.cfm.

WebWatch's latest groundbreaking report, "Searching for Disclosure," culminates more than six months of testing and analysis of 15 of the Web’s most-trafficked search engines including Google, Yahoo!, MSN, Lycos, AltaVista and Netscape, which millions of consumers rely on as guides to finding information online. WebWatch, the leader in investigative reporting on Web credibility issues, used guidelines created by the U.S. Federal Trade Commission (FTC) as a research tool and engaged professional librarians as expert testers.

WebWatch’s report shows 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 – since the FTC two years ago warned several major search engines about problems with these practices. While this report was being researched, two of the Web’s top five search engines announced they would terminate paid inclusion.

Yet even the report’s testers, information professionals by trade, found disclosure and transparency practices among many search engines confusing and confounding, increasing the likelihood consumers may also have a difficult time distinguishing objective search results from paid advertising.

"Consumers need to understand and remember that many search engines more closely resemble the Yellow Pages or classified ads than a library, where information is categorized according to subject, relevance and other objective criteria," said Beau Brendler, WebWatch’s director. "Search engines are making tons of money selling advertising, and there’s nothing wrong with that. But the majority could do a much better job making clear what is advertising, and what is not."

The report also notes that some search engine marketers and many advertisers actually count on consumers confusing paid advertising in the form of search results, with real results.

Key Findings:

All sites tested could improve the visibility and clarity of their disclosures, testers found. More troubling, however, is that testers found that some search engines seem to be doing as little as possible to explain their relationship with advertisers, and as much as possible to obfuscate their use and disclosure of paid placement and paid inclusion.

Of the search engines tested, one was found not to contain any disclosures, nor to comply with any of the FTC guidelines. Despite the testers’ expertise, nearly all experienced some difficulties with certain search engines, whether identifying headings or hyperlinks; differentiating between content promotion, paid placement and paid inclusion; or making sense of disclosure statements.

In addition:

• Paid inclusion was not satisfactorily disclosed or explained by any of the search engines tested.
  • Meta-engines, which present results from several search engines simultaneously, repeatedly failed to adequately disclose the presence of paid placement and paid inclusion within search results.
  
  
• Testers found disclosures generally hard to find, accessible by headings and hyperlinks that often blend in with the page, making them easy for consumers to overlook.

The report is WebWatch’s second detailed examination of transparency and credibility issues among search engines. In 2002, WebWatch published a comprehensive national survey of 1,500 adult experienced Internet users, and reported that more than 60 percent did not understand that search engines charge advertisers a fee in exchange for a certain prominence on search pages or a higher ranking in results – “paid placement.”WebWatch then commissioned an ethnographic study of Internet users in four U.S. cities to study their interaction with search engines.

That report revealed not only that participants in the study were often fooled by paid placement, but also that they reacted emotionally and negatively when told many search engine results are bought and paid for. Further, many did not understand common terms used by search engines and many Web sites, such as "sponsored by," "sponsored links," or “brought to you by,” actually mean, "this is a paid advertisement."

WebWatch will continue to monitor the progress of search engines and their compliance with Federal Trade Commission guidelines and recommendations. In September 2003, WebWatch and ConsumerReports.org rated many top search engines using traditional Consumer Reports-style methodology, with criteria from WebWatch’s guidelines for improving the credibility of search engines (http://www.consumerwebwatch.org
/guidelines-search-engines.cfm).

Those search engine ratings can be found at http://www.consumerwebwatch.org.

In addition, WebWatch will hold its first conference on search engines and health searches in San Francisco in June 2005.

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About Consumer Reports WebWatch
Consumer Reports WebWatch is the leader in investigative reporting on trust and credibility in the online marketplace. WebWatch uses the proven methods of Consumer Reports to produce comprehensive research, breakthrough conferences and serves as a daily resource of unbiased and trustworthy information. Its research agenda includes entire online marketplaces, such as travel, search, health, financial services and more. WebWatch is a project of Consumers Union and is funded by The Pew Charitable Trusts, The John S. and James L. Knight Foundation, and the Open Society Institute. WebWatch's investigative reports, articles and news are available to the general public at http://www.consumerwebwatch.org.

Consumers Union, the nonprofit publisher of Consumer Reports, is an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. To achieve this mission, we test, inform, and protect. To maintain our independence and impartiality, CU accepts no outside advertising, no free test samples, and has no agenda other than the interests of consumers. CU supports itself through the sale of its information products and services, individual contributions, and a few noncommercial grants. Consumer Reports content can be found online at ConsumerReports.org. Consumers Union's public policy work can be found online at ConsumersUnion.org.