June 17, 2004

French ISP Wanadoo argued before the UK's Advertising Standards Authority that all sponsored links at its web site were clearly identified as being delivered by Overture, by a link at the foot of each sponsored search result.

Freeserve plc has been told by an advertising watchdog that search results on its web site, now re-branded as Wanadoo, must clearly identify sponsored links following a complaint that its rankings are based on the sums paid to search advertising company Overture, not relevance.

Clicking the Overture link would open a window with the following text:

--    "Overture ranks its Advertiser Listings based on the amount the Websites bid, with the highest bid amount at the top of the search listings. Websites pay Overture the amount shown on www.uk.overture.com next to the Advertiser Listing, when a user clicks through to their Website."

The ISP said the sponsored results were all checked manually for relevance to the search criteria and the most relevant results always appeared first. It argued that because advertisers had to pay each time a consumer clicked on their search entry, it was in their interests to appear only in relevant search results.

A visit to uk.overture.com reveals that Singers Outdoor bid up to 30 pence per click-through, eBay 26 pence and LXDirect.com 25 pence.

The ISP said it did not believe its web site was misleading or its search results were less relevant because they showed sponsored links first. It said it would add a link to its search page that consumers could use to find more information about how its search engine service worked and how results were ranked.

But it seems that this promise was insufficient for the ASA, which became involved following a complaint from the head of web design firm 2-Minute-Website.com. “I contacted the ASA on behalf of all our small business clients”, said Managing Director, Andrew Ellam.

“Since they pay less than a hundred pounds to get their website, they can’t afford to spend hundreds on advertising - and they shouldn’t have to," he continued. "Consumers are likely to be fooled into thinking these adverts are unbiased search results, and small businesses who should appear in the listings are suffering”.

The ASA noted that each sponsored link on Freeserve's site had a hyperlink to an explanatory pop-up box and sponsored links were identified by the Overture hyperlink.

However, because sponsored links were not clearly identified by a headline or title, and the search page did not contain an explanation of the purpose of the hyperlink, it considered that consumers were unlikely to realise that the Overture hyperlink indicated that results were sponsored and concluded that "consumers could be misled."

It asked the ISP to ensure that sponsored links were clearly identified in future.

This follows the CAP Code, the ASA's rule book, which states that "marketing communications" should be "designed and presented in such a way that it is clear that they are marketing communications". Another rules states that marketers "should make clear that advertisement features are advertisements, for example by heading them 'advertisement feature'."

The ruling is a clear endorsement of Google's approach: Overture's biggest rival clearly marks all 'sponsored links' in search results as such.

This UK ruling will likely be of less concern to Overture itself. Its biggest search partner is its parent company, Yahoo!, and a search on Yahoo!'s UK site already separates 'Sponsored Results' from 'Web Results'.

While the ASA ruling is in the name of Freeserve plc, the brand launched by High Street retailer Dixons, the ISP was re-branded as Wanadoo in April. Wanadoo, part of France Telecom, bought Freeserve for £1.6 billion in December 2000. The complaint to the UK's Advertising Standards Authority was made two months before the re-branding.

A spokesperson for Wanadoo told OUT-LAW.COM that the company is looking into today's ruling "with interest" but that the company has no further comment at this time.

ASA spokesperson Donna Mitchell said consumers "need to know when advertising is advertising" and warned that today's ruling applies to the industry as a whole. "Anyone who doesn't currently clearly identify their sponsored links should do so now," she said.

Andrew Ellam said he has contacted the ASA about a number of other UK search engines and asked it to issue UK guidelines to correspond with those in the US, where the Federal Trade Commission demands that search sites make ‘clear and conspicuous disclosure’ when advertisers have paid to appear in their results.

Ellam said that a check of the UK's top 20 search sites indicates that 13 may have similar problems to Wanadoo.

Source: Out Law.com

        

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