Telstra guilty in keywords advertising

Wednesday, 09 April 2008 03:51 Noric Dilanchian

The rise in keyword advertising has brought with it opportunity for some and piracy, theft or misleading conduct for others. Telstra yesterday admitted it fell into the later camp in 2005 in its use of keyword advertising.

A court case report in today's Australian, indicates that "Telstra announced yesterday that its classifieds division, the Trading Post contravened sections 52 and 53(d) of the Trade Practices Act through its search engine marketing on google.com.au in August 2005."

The case was begun in mid-2007 by the Australian Competition and Consumer Commission (ACCC). The ACCC's press release of July 2007 framed its legal claim as follows (emphasis added):

"The ACCC is alleging that Trading Post contravened sections 52 and 53(d) of the Trade Practices Act 1974 in 2005 when the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google sponsored links to Trading Post's website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who compete against Trading Post in automotive sales.

The ACCC is also alleging that Google, by causing the Kloster Ford and Charlestown Toyota links to be published on its website, engaged in misleading and deceptive conduct in breach of section 52 of the Act.

Further, the ACCC is alleging that Google, by failing to adequately distinguish sponsored links from "organic" search results, has engaged and continues to engage in misleading and deceptive conduct in breach of section 52 of the Act."

Yesterday's announced settlement requires Telstra to engage an independent auditor to conduct an annual review of Telstra business' processes relating to the Trading Post search engine advertising.

Meanwhile the case continues as regards Google. I was interviewed today regarding the legal implications for Google of this case by smartcompany.com.au.

Practical legal implications

What lessons are there from Telstra's settlement for other businesses? It indicates the following:

• For advertisers, set clear rules for keyword advertising by your business. Update your advertising policies and procedures to ensure compliance with laws in the fields of intellectual property, trade practices and business law generally.
• For advertisers, update your trade practices compliance manual.
• For publishers, update the terms and conditions on which you accept advertising.
• For brand owners, open an account with the Australian agent for the software tool Keyword Guardian. It automates discovery of names used in keyword accounts.
• For search engine, watch this space.

Call if you wish to discuss any of these practical suggestions.

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