UK government is looking at paid listings in the SERP's, they want paid listings clearly marked. It is about time that SE feet are held to the fire on these conflicts of interest, that favor advertising partners. http://zdnet.com.com/2100-1104_2-5235529.html?tag=zdnn.alert
The high road is usually the better path. It is useful to seperate the 2 into. Knowing what one is clicking on, gets you to your intended results more quickly.
With the current systems in place to ensure relevancy to the search terms, I can't see why it should be clearer than it already is. Quite often the ads or MORE relevant than the natural results so what is the deal? The person who searches doesn't have to pay for the clicks so they are not being fooled into anything as long as G and Overture etc. keep hammering their advertisers for relevancy.
Google and Yahoo do identify paid placements and I agree with you it is perfectly clear as far as I'm concerned, but some of the other engines -- that almost nobody uses -- apparently do not identify these ads. The other point you make is one that is seldom made but one I totally agree with. I think that if someone pays for an ad to be displayed when a particular keyword is searched on, that ad will probably be for one of the most relevant sites. Think about it. Someone is willing to pay substantial money for a click through on their paid listing. That payment is going to be totally wasted if the visitor does not find what s/he is looking for and leaves the site without buying or otherwise using the services or information offered by the site. So unlike people who are simply fighting to get their site high in the organic SERPs and may not worry about relevancy as long as they get traffic, the people who are paying for a listing are highly motivated to offer what the searcher is looking for. Otherwise they are going to go broke in a hurry. So if you are looking for a relevant site you may well be more successful clicking on the paid listing.
What they are pissed about is mixing in paid results with organic search results WITHOUT clearly marking them. The complete separation of paid results from organic results will be made law if the SE do not start doing a better job. The FTC has already warned the engines in 2002 about this, they are still breaking the rules in the US also. The redirection of trademark traffic is something that Google is in court for right now, also the redirection of traffic to ADSENSE publishing partners is hot news right now, just read some of Danny Sullivan's latest articles on Paid Inclusion, he is saying the same thing I have been saying in www.webcenter.squarespace.com on the redirection of traffic to affiliated advertisers. This is the hottest issue in the industry. The FTC letter is linked in the above URL.
This is a right step in the right direction.I can't imagine a search collecting money from marketers to get listed.Tell me,how will the public trust the services of such Search Engine?.God help us.