Thanks to Dan Thies for drawing my attention to the latest “mayhem” surrounding Google, rel=nofollow and the FTC. This is an area close to my heart, as my article from 2005, Search Marketing & The Law, made clear:

It would be foolish to expect to be operating in a multi-billion dollar global marketing industry and not expect to comply with marketing laws and regulations in the countries in which you are marketing.

The current confusion stems from Matt Cutts’ blog post on paid links back in April, which called for both human readable and machine readable disclosure of paid links - machine readable first:

If you want to sell a link, you should at least provide machine-readable disclosure for paid links by making your link in a way that doesn’t affect search engines. There’s a ton of ways to do that. For example, you could make a paid link go through a redirect where the redirect url is robot’ed out using robots.txt. You could also use the rel=nofollow attribute.

The problem here is that there is no machine-readable disclosure for paid links. Matt suggests that there a “ton” of ways, but none of these ways mean “this link is paid”, let alone the means, method and motive for payment. This is where the confusion starts.

Matt then goes on to discuss human-readable disclosure:

The other best practice I’d advise is to provide human readable disclosure that a link/review/article is paid.

Here I fully agree with Matt - it’s important not to mislead your visitors. No confusion here.

The real confusion seems to come from the next thing Matt says:

Google’s quality guidelines are more concerned with the machine-readable aspect of disclosing paid links/posts, but the Federal Trade Commission has said that human-readable disclosure is important too:

The petition to us did raise a question about compliance with the FTC act,” said Mary K. Engle, FTC associate director for advertising practices. “We wanted to make clear . . . if you’re being paid, you should disclose that.”

To make sure that you’re in good shape, go with both human-readable disclosure and machine-readable disclosure, using any of the methods I mentioned above.

Some people have inferred that Matt is saying that paid links that aren’t labelled in a machine-readable way are contravening the FTC guidelines. He isn’t saying this at all. Read carefully. The FTC is concerned with human-readable disclosure, not machine-readable disclosure. There is no machine-readable disclosure for paid links.

It is possible to place deceptive advertising in search results using various means. But failing to label a link as paid in a machine-readable way is not one of them. There is no machine-readable disclosure for paid links.

I see that Google have added to their Quality Guidelines, including a new, helpful(?) definition of cloaking:

Cloaking refers to the practice of presenting different content or URLs to users and search engines. Serving up different results based on user agent may cause your site to be perceived as deceptive and removed from the Google index.

Some examples of cloaking include:

• Serving a page of HTML text to search engines, while showing a page of images or Flash to users.
• Serving different content to search engines than to users.

That’s fairly clear then.

My own definition of cloaking is

My rule of thumb is that you should not need to know that a search engine is making the request in order to deliver a response to that request. The obvious exception to this rule of thumb is Paid Inclusion. Paid Inclusion isn’t cloaking.