Yahoo Shopping search rankings under scrutiny for stealth marketing

One of Japan’s biggest online retail sites, Yahoo Shopping, is under scrutiny for how it displays search results, with products from companies paying more in advertising fees often ranked higher in a practice critics say is “stealth marketing.”

Two methods on the site that allow sellers to gain higher rankings have been called into question, according to industry experts.

In the first case, customers who search for goods on the site may draw an “item match” with a promoted product, lifting it to the top of the retrieval search results. Retailers also pay advertisement fees.

In explaining the method to sellers on its site, Yahoo Shopping, which is run by Yahoo Japan Corp., says, “It allows (sellers) to appeal to customers without giving the impression of really advertising.”

Yahoo all but admitted it was practicing stealth marketing, an advertising strategy under the broader umbrella of guerilla marketing that conceals the fact that goods or services are being displayed as advertisements. The company later changed the naming of the rankings to “store recommendations.”

The second method is a mechanism that allows retailers that pay higher advertising fees to be listed prominently at the top of search results. This has drawn criticism from outsiders as “selling rankings for money.”

Yahoo, however, argues the practice is not “stealth marketing” as its site is “the same as a catalog. (That is to say,) the entire shopping website is regarded as an advertisement,” meaning there is no reason for it to show ads for individual goods.

There are many who defend Yahoo’s practice of displaying sellers who pay higher advertising fees in a more prominent position, arguing that brick-and-mortar stores in the real world use similar marketing strategies.

For example, volume retailers display manufacturers’ products in more visible locations in their stores, if they pay “cooperation money.” Even for exhibitions, companies that pay the most in exhibit fees get to use the larger spaces for their wares. “What exactly is the difference?” they insist.

Some industry insiders say consumer choice is more important than whether or not such a strategy is labeled as stealth marketing.

Yoichiro Itakura, a lawyer who specializes in consumer affairs, says the term stealth marketing only applies in cases where the fact advertising has been paid for is concealed.

“Just because the method of selling is unpleasant doesn’t necessarily mean we’re talking about stealth marketing,” Itakura said. “If something is unpleasant, you have the choice not to buy it.”

According to media reports, Rakuten and Amazon, the two other major online shopping sites, do not prioritize goods on their search results based on the receipt of payments.

Some sites divulge the criteria for determining the order of their search results, while others keep their methodology concealed.

Restaurant review site Tabelog which, like similar sites, allows customers to view store rankings and provides details for making reservations, says it gives preference to displaying businesses that use its fee-based service. But Gurunavi, another restaurant ranking site, does not divulge such information, calling it a “trade secret.”

Aside from ethical considerations, the credibility of a site may be affected when users are pitched products they have not requested, especially when site operators maintain secrecy about their methods.

Kotaro Kuwazu, a senior researcher at the Nomura Research Institute, said a balance between retailers providing advertising fees and sites valuing their retailers is vital to sustain the business model.

“It is putting the cart before horse to say quality site retailers will be eliminated if they don’t pay advertising fees, but if there are no advertising fees (from retailers) this will disrupt continuation of site services,” Kuwazu said.