Edelman Critiques Google AdWords

    October 11, 2006
    WebProNews Staff

Spyware researcher Ben Edelman looked into pay-per-click scams and the lengthy AdWords Content Policy, and found plenty of advertisers pushing to and past the boundaries of “ethical and legal advertising” online.

Edelman Critiques Google AdWords
Edelman Critiques Google AdWords

Edelman took particular notice of ads that appear to violate Federal Trade Commission rules on ad composition, as well as ads that make false claims. He discussed his findings in a story titled False and Deceptive Pay-Per-Click Ads.

“Read Google’s voluminous Adwords Content Policy, and you’d think Google is awfully tough on bad ads,” he wrote. “What kind of scam could get through rules like these?” Edelman then knocked down that straw man with a number of examples.

First there is the issue of advertisers selling “free” products. “These ads are particularly galling because, in each example, the specified program is available for free elsewhere on the web, e.g. directly from its developer’s web site,” Edelman said.

Ringtones have been another target of advertisers who bill them as “free,” yet victims end up paying a monthly subscription fee. True conditions of such “free” offers are buried in fine print, and violate FTC rules (emphasis added):

The FTC’s Guide Concerning the Use of the Word ‘Free’ is exactly on point. The guide instructs advertisers to use the word “free” (and all words similar in meaning) with “extreme care” “to avoid any possibility that consumers will be misled or deceived.” The guide sets out specific rules as to how and when the word “free” may be used, and it culminates with an incredible provision prohibiting fine print to disclaim what “free” promises.

Faulting the advertisers for these ads showing up in AdWords does not get Google off the hook either, in Edelman’s opinion:

Google would likely blame its advertisers for these dubious ads. But Google’s other advertising policies demonstrate that Google has both the right and the ability to limit the ads shown on its site. Google certainly profits from the ads it is paid to show. Profits plus the right and ability to control yield exactly the requirements for vicarious liability in other areas of the law (e.g. copyright infringement).

Google profits from the ads, as do those who bid for their placement. Edelman noted the profit pendulum swings heavily in Google’s direction based on one part of his research:

One clear result of my recent bidding simulations: When advertisers have similar valuations (as these advertisers do), they tend to “bid away” their surpluses. That is, they bid almost as much as a click is worth to them — so they earn low profits, while search engines reap high revenues. When a user pays such an advertiser, it wouldn’t be surprising if the majority of that advertiser’s gross profit flowed through to Google.

If Google does follow through on rumors it will buy Facebook for $2.3 billion, it may be advertisers like the ones found by Edelman paying for it.

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David Utter is a staff writer for WebProNews covering technology and business.