Federal Trade Commission Warns Google, Others To Carefully Distinguish Search Results From Paid Ad Results

The Federal Trade Commission warned major search engines like Google Inc. (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) that they must more clearly distinguish ordinary search results from visually similar paid ads, in a recent letter.

The commission first advised search engines in 2002 that paid ads must be visibly distinct from unpaid search results. Since then, compliance with this rule has dropped notably, according to the letter. Failure to comply could be considered a “deceptive practice” that misleads consumers, the commission said.

“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,” said the letter.

Ads located immediately above so-called "natural" results have become less and less distinguishable from natural results in recent years, said the commission. It cited a 2012 survey by SEOBook that found that nearly half of searchers couldn’t tell the difference between ads and search results. Google’s practice, for example, is to put ad results on a slightly shaded beige background.

The commission asked for more obvious textual labeling and visual cues from all search engines, but it didn’t target specific companies or make more specific recommendations.

A Google spokesperson said in a statement that “clear labeling and disclosure of paid results is important, and we’ve always strived to do that as our products have evolved."

The FTC has also recently mulled a crackdown on potentially deceptive Twitter advertising, especially by celebrities who tweet endorsements without disclosing that they’ve been paid to do so, reported the New York Times.