Josh asks about the relationship between consumers and search engines. I actually think that Google is way out front on this issue by their careful separation of paid search from PageRank. Google explains,
Advertising on Google is always clearly identified as a "Sponsored Link." It is a core value for Google that there be no compromising of the integrity of our results. We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Our users trust Google's objectivity and no short-term gain could ever justify breaching that trust.
This may only matter to some consumers (see Eric Goldman's comment to Josh's post), but disclosure to the consumer sets the tone for corporate integrity.
In my branding paper, I suggest that Google's Auction IPO was structured to reinforce this brand image. Google discloses which results are paid for and which are not for the same reasons that they sought transparency in their IPO process.
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1. Posted by Joshua Wright on August 9, 2005 @ 12:11 | Permalink
Vic, where does that statement from Google about PageRank v. Sponsored Links appear? It is not clear that everybody who goes to Google (or other search engines) clearly knows about is paid for and what is not by looking at the page. If we are talking about "deceiving consumer expectations," I wonder if more consumers feel deceived by paid placement or payola (which has been a prevalent practice for over a century and subject to highly publicized federal hearings).
I agree with you that Google's choice to be out in front on this issue is a branding strategy to differentiate them from rivals. Notice that this decision was made without mandatory disclosure, and leaves open the possibility for rivals to engage in alternative strategies with more or less disclosure in response to consumer demand.
2. Posted by Vic Fleischer on August 9, 2005 @ 12:20 | Permalink
http://www.google.com/corporate/tenthings.html
I agree -- if branding can do it without mandatory disclosure, so much the better.
It's puzzling to me that no one has tried pitching a payola-free commercial radio station ... perhaps suggesting that I have exaggerated the extent to which deception is a problem. Maybe people just don't care, or they think that payola efficiently delivers the right spins to the turntable.
3. Posted by Eric Goldman on August 13, 2005 @ 10:15 | Permalink
Perhaps no one has pitched a payola-free station because, by law, they are all required to be payola free! So it's not exactly the most powerful competitive differentiator. Eric.
4. Posted by Joshua Wright on August 13, 2005 @ 10:29 | Permalink
Eric, that is not completely correct. The federal payola regulation prohibits only undisclosed payments for spins. Even at that, payments routed through indies are generally legal.
Spitzer's ban (which has so far only hit Sony, but others are likely to follow) goes far beyond what the law is regarding payola by actually banning it.
In other words, I think there would have been room for a "payola-free" brand of radio station. I have been doing some research on this, and there are actually a few stations (KROQ in Los Angeles comes to mind) that are thought not to accept payola by industry insiders. Those stations have not, however, marketed that information to the public to my knowledge.
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