Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • Executive Education
    • First Look
    • HBS Case
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    Sponsored Links’ or ’Advertisements’?: Measuring Labeling Alternatives in Internet Search Engines
    30 Nov 2010Working Paper Summaries

    Sponsored Links’ or ’Advertisements’?: Measuring Labeling Alternatives in Internet Search Engines

    by Benjamin Edelman and Duncan S. Gilchrist
    In processing a search for a particular phrase, Internet search engines generally offer two types of results: the algorithmic results, which a search engine selects based on relevance, and the "sponsored links," for which advertisers pay. The latter often occupy prominent screen space. But does the average web surfer realize that they are advertisements? In an online experiment, Harvard Business School professor Benjamin Edelman and doctoral candidate Duncan S. Gilchrist show that "sponsored link" is too vague a term for some users to understand, and that "paid advertisement" is a label that better clarifies the nature of the link. They call on the FTC to compel search engines to improve their disclosures. Key concepts include:
    • Through October 2010, leading search engines Google, Yahoo!, and Bing presented their advertisements with the labels "sponsored links," "sponsored results," and "sponsored sites," respectively. (In November, Google substituted the term "ads.")
    • In an online experiment that replaced these labels with the term "paid advertisement," users were up to 33 percent less likely to click on the sponsored link.
    • Certain categories of users were particularly influenced by the improved label. The improved labels had largest effect on users without college degrees, users with annual income below $100,000, and users who utilize the web less than 12 hours per week.
    • The Federal Trade Commission has called for "clear and conspicuous disclosures" to label search advertisements. Because available evidence suggests users do not understand widely used labels, the researchers believe the FTC should require search engines to use the label "advertisement" or "paid advertisement" rather than vague or easily overlooked alternatives.
    LinkedIn
    Email

    Author Abstract

    In an online experiment, we measure users' interactions with search engines, both in standard configurations and in modified versions with improved labels identifying search engine advertisements. In particular, for a random subset of users, we change "sponsored link" or "ad" labels to instead read "paid advertisement." Relative to users receiving the "sponsored link" or "ad" labels, users receiving the "paid advertisement" label click 23% and 26% fewer advertisements, respectively. Users seeing "paid advertisement" labels also correctly report that they click fewer advertisements, controlling for the number of advertisements they actually click. Results are most pronounced for commercial searches, and for users with low income, low education, and little online experience. We find no evidence that consumers find Google's new "ads" label more informative than the longstanding prior label "sponsored links."

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: November 2010 (Revised January 2011)
    • HBS Working Paper Number: 11-048
    • Faculty Unit(s): Negotiation, Organizations & Markets
        Trending
          • 04 Dec 2019
          • Book

          Creating the Experimentation Organization

          • 17 May 2017
          • Research & Ideas

          Minorities Who 'Whiten' Job Resumes Get More Interviews

          • 06 Nov 2019
          • Op-Ed

          Torched Planet: The Business Case to Reinvent Almost Everything

          • 25 Feb 2019
          • Research & Ideas

          How Gender Stereotypes Kill a Woman’s Self-Confidence

          • 12 Nov 2019
          • Research & Ideas

          Corporate Innovation Increasingly Benefits from Government Research

      Find Related Articles
      • Marketing Strategy
      • Internet
      • Advertising
      • Technology

      Sign up for our weekly newsletter

      Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
      ǁ
      Campus Map
      Campus Map
      Harvard Business School Working Knowledge
      Baker Library | Bloomberg Center
      Soldiers Field
      Boston, MA 02163
      Email: Editor-in-Chief
      →Map & Directions
      →More Contact Information
      • Make a Gift
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      Copyright © President & Fellows of Harvard College
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      Copyright © President & Fellows of Harvard College