FTC Warns Search Engines on Advertising Disclosures

bigstock-Marketing-word-cloud-26274962After noticing a decline in compliance with its search engine advertising disclosure letter issued back in 2002, the Federal Trade Commission (FTC) recently sent out more than two dozen letters to various search engine companies instructing them to clearly distinguish between paid advertising content and natural Internet search results.  

The FTC is seeking to improve digital advertising disclosure practices.  Differentiating natural content from paid-for advertising can be difficult for a consumer.  The lack of clear and conspicuous disclosures detailing the difference between paid and natural search results can result in consumer confusion and a tendency to respond to an ad they may not have otherwise considered.  

The FTC advised search engine companies to improve the clarity and prominence of advertising disclosures by increasing visual cues (such as more prominent shading and borders) and text labels (such as using more prominent fonts and placements of advertising disclosures) for paid search content.  The FTC also noted that its guidance applies to other platforms as well, such as social media platforms that include paid advertising in user feeds.  The FTC based its growing concern off various studies – most notably, a 2005 Pew Research Center survey that found 62 percent of searchers were not even aware of the distinction between paid and non-paid results.

The letter indicated that regardless of the form a search takes (or the platform used), paid results should be clearly distinguishable.  The FTC letters were sent to both general all-purpose search engines and to smaller, more specialized search engines that are heavily trafficked.

Advertising represents a search engine’s bread and butter, but without clear disclosures, they could potentially be liable for unfair or deceptive practices in violation of the FTC Act.  Therefore, search engines should engage in strenuous efforts to strike a balance between their advertising practices and FTC compliance.

 



Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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