Google has agreed to forfeit $500 million for allowing online Canadian pharmacies to place advertisements through its AdWords program targeting consumers in the United States, the Justice Department has confirmed.

Exactly what the nature of the transgression was is unclear. Google has refused to discuss the nature of the Justice Department investigation, writes Eric Savitz at Forbes.com. Some clues, though, it says, include:

• A disclosure by Google in September 2010 that it had filed a lawsuit against "advertisers we believe have deliberately broken our rules," in particular involving "rogue online pharmacies" that "illegally sell drugs on the Web."

• A newer, tougher stance on online pharma ads earlier this year. "The company said it would only accept ads from U.S. and Canadian pharmacies in the countries in which they are accredited – in the U.S., the National Association of Boards of Pharmacy VIPPS program, and in Canada, the Canadian International Pharmacy Association," according to Savitz.

Little Guidance from the Government

Depending on the details, Google may be forgiven for having gotten caught up in illicit pharma advertising practices. The U.S. government has done little to shed light on what is permissible, preferring instead to nix certain ad formats after they’ve been introduced. Attempts have been made, focusing on the government‘s fair balance requirements.

For example, Google created a "FDA-Friendly" online pharma ad format, which Bayer used to market the birth-control pill Yaz. These ads feature a headline linking to the product site, a line of text advising viewers to "Read important product info here," and a bottom line reading "Click to see full safety and prescribing information, including boxed warning." This is followed by a "fixed" link to physician labeling.

Also Tremor Video launched a video ad-banner format called Rx In-Stream, uses shorter-form, pre-roll video in place of the long-form video ads that typically convey safety information. An accompanying banner ad, instead, provides the data about the risks and side effects of the drug in question, while the shorter-form video ad focuses on product messaging and branding.

A Growing Market….

Despite the legal uncertainties online pharma advertising is expected to be a growing category of online spend. eMarketer predicts online ad spending in pharma will have reached $1.52 billion by 2014.

…Fueled by Some Interesting Stats

One of the drivers is that these ads have had a noticeable impact on consumer behavior. People pay attention to ads as they go online to educate themselves about conditions and treatment options, according to About.com's 2010 Health Study. Fifty-eight percent of respondents said they are looking for pharmaceutical advertisers to provide them with information on possible side effects and drug safety, while 47% said they look to ads to help them cope with a condition or disease.

A study by comScore found that branded websites have the greatest impact on conversions and also reinforce the significance of display and search advertising in increasing awareness and favorability toward a brand. The study found that visitation to a branded website generated the greatest positive lifts in conversion. Existing patients increased their refill rate 15.5 percentage points more than those who did not visit the site. The percentage of prospects beginning treatment after visiting a branded site was 8.8 percentage points higher than prospects with no exposure to the branded site.

The study also found that exposure to online display advertising and branded websites have a positive impact on awareness and favorability among both prospects and patients. For prospects, exposure to a display ad increased both aided and unaided brand awareness by 2.8 and 1.8 percentage points, respectively.