Mistaken Judgments for Content Labeled Advertising

Last week I applauded the FTC for arguing against the mandatory labeling of commerical emails. In that post, I argued that the labels would increase the rate of erroneous judgments by recipients, because the recipients would mistakenly believe that the advertising was lower-value content than it actually was.

Coincidentally, over the weekend I came across a study by Jansen and Resnick called “Examining Searching Perceptions of and Interactions with Sponsored Results.” The researchers were trying to prove that consumers don’t like sponsored search results. In the process of doing so, they presented searchers with identical search results, one set characterized as organic results and the other set characterized as sponsored links. As the press release says:

“While study participants rated 52 percent of the organic results as “relevant,” searchers described 42 percent of sponsored links as “relevant” even though both sets of results were identical.”

As this result demonstrates, 10% of the results were graded irrelevant solely because of the sponsored link label.

From this, I derive a contrarian policy judgment. Consumers don’t necessarily benefit by knowing that content is advertising vs. organic. Indeed, such labeling may mislead the consumers–exactly the effect the consumer protectionists are trying to avoid. Consumers think they want to know if something is advertising, but if it leads to sorting mistakes, maybe they are better off not knowing.