November 6th, 2003
What Shopping Guides Don't Advertise
By Leslie Walker
Washington Post
Some Internet shopping guides may not be the unbiased brokers they seem at first blush. Rather, they appear more interested in cozying up to advertisers.
That’s the conclusion I drew after testing the Web’s top shopping guides, several of which underwent dramatic makeovers in recent months. In addition to running searches on each guide, I interviewed the people who run them. While all seem to be struggling to balance the needs of consumers and merchants, few appear to be as frank with consumers as they could be.
You wouldn’t guess from visiting Shopping.com and BizRate.com, for example, that both run auctions in the background in which merchants can boost their placement in certain search results by paying the sites more money. The two are the Web’s most heavily trafficked shopping guides after Yahoo Shopping, and they market themselves as places shoppers can go to check out prices, read merchant ratings and explore product descriptions for just about anything.
While Google and other search services have similar pay-for-placement ad programs, the major search engines typically separate paid results with special lines and color codes and clearly label them as sponsored links.
Not so Shopping.com or BizRate.com. Neither spells out on its search-results pages the fact that advertisers are paying for placement. Both say they are not trying to deceive anyone, but the brief disclosures they offer are buried so deeply I had trouble finding the links leading to them.
After I pointed out what seemed to be a lack of disclosure about its ad auctions, Shopping.com this week added a new link at the bottom of its paid merchant listings: “Why are these stores listed?” Clicking on it triggers a pop-up window with an explanation of the site’s bid-for-placement system. Previously, the site had only a link at the bottom of the results pages, in a font so tiny you almost had to stick your nose right up to your computer screen to read it.
On BizRate.com, the only disclosure I could find was a one-liner at the end of its “About BizRate.com” page, saying “some” stores pay for premium placement in “sections” of the site.
Moreover, BizRate.com issued a press release this week proudly touting the re-launch of its site. It highlighted a new formula it had developed for sorting results— “The Most Relevant Shopping Search Listings”—and said the formula factored in many variables, such as product price, merchant reputation, product popularity and whether a product is in stock. What it did not say is that another factor in the formula is how much money each merchant is willing to pay. I discovered that only by asking BizRate.com chief executive Chuck Davis.
How advertising is identified in Web search results is an increasingly thorny issue for new media as more people are running Internet searches to help them make day-to-day decisions. On a typical day, people conduct more than half a billion Web searches, and many have little clue how the matching results are sorted.
“Embedded advertising is an increasing problem in a number of contexts, whether it’s on television, Web search engines or on airlines,” said Gary Ruskin, executive director of Commercial Alert, a nonprofit group. “People have the right to know when an ad is an ad.”
About two years ago, Commercial Alert filed a complaint about Web search engines with the Federal Trade Commission, saying paid search results amounted to deceptive advertising because they were often disguised as impartial, “relevant” matches. The FTC responded last year with a letter to the Web’s largest search engines, urging them to offer “clear and conspicuous” disclosure of paid placements so users could differentiate ads from regular results, which are determined by special relevancy formulas.
The Web’s general search engines have pretty much cleaned up their acts since then, taking care to highlight paid results. It remains unclear whether shopping guides are enough like general Web search engines that the FTC’s specific guidelines would apply to them. But Beverly Thomas, an attorney in the FTC’s advertising practices division, said the general principles governing federal advertising rules would apply.
“Any entity engaged in advertising—which comparison shopping sites are—should try to ensure their representations are not deceptive,” she said.
To be sure, Shopping.com and BizRate.com offer many helpful tools, as I recently wrote in a roundup of shopping guides. But some seem to do a better job in helping consumers know what they’re looking at.
Other guides have different methods for letting merchants buy prominent placement. PriceGrabber.com and Yahoo Shopping sell the top slots in certain categories, but at fixed prices rather than by bids. Both use special design clues that attempt to convey which listings have been bought. PriceGrabber labels the first four ad slots in yellow letters: “Featured Merchant.” Rivals, though, question whether consumers know that “featured” means “advertiser.”
Yahoo sells placement only in its price comparison charts, not its regular results. It rotates paying advertisers through each of the premium slots. The results pages for all product searches are sorted by a formula that weighs 28 attributes such as price and sales history. Merchant payments are not factored into this formula.
To be fair, both BizRate.com and Shopping.com let users re-sort listings by price or merchant ratings. But the lack of clear labeling on Shopping.com’s default search results means consumers could mistakenly conclude that an impartial “relevancy” formula or prices are governing the listings. The headline topping search results suggests that by stating, “Compare Prices from X Stores,” with X being the number of merchants selling the item.
Shopping.com Chief Operating Officer Nirav Tolia said his site struggles to find the most helpful formula for sorting results. Fewer than 5 percent of site visitors buy from the lowest-priced merchant, Tolia said, implying that most people don’t want to see the lowest prices displayed first.
“We are finding that consumers are very different about what they want, from one consumer to another and from one category to another, “ he said.
Until recently, BizRate.com had operated on a pay-for-placement system similar to Shopping.com’s, but this week it introduced a new formula in which a merchant’s bid is only one factor affecting placement. More important factors, BizRate.com’s Davis said, are merchant ratings and popularity. He declined to say how much a merchant’s payment counts in the formula, but noted that poor ratings or lack of product availability will keep a merchant from appearing high in the results, regardless of how much it bids.
As for disclosing the site’s ad practices, he said BizRate.com is revising its “help” pages to explain the new model more clearly. As a shopping guide, BizRate.com is different from a general search engine such as Google, he added.
“With BizRate, we are trying to create a marketplace that benefits the consumer and has a mix of paid and free merchants,” he said.