eBay's Warning Shot To Google: We Can Take Our Ad Money Elsewhere

from the warning-signs dept

Over the last few years, there have been a number of questions about whether eBay and Google were on a collision path. The two appear to be in separate businesses, but there is definitely some overlap. At the same time, however, the two were partners. eBay has consistently been one of the biggest advertisers on Google. In fact, there were rumors that key reason that eBay bought Shopping.com was because Shopping.com's AdWords bids kept pushing eBay's AdWords bids higher. By taking out Shopping.com, eBay would then be able to spend a lot less money on Google ads.

As the competition has become more direct, however, things may get particularly interesting. A year ago, Google announced its Google Checkout offering, which was somewhat competitive with eBay's PayPal (at least for merchants). This was worrisome enough that eBay banned Google checkout from its site. This past Monday, Google announced a somewhat childish plan to hold a protest meeting outside eBay's own conference. Apparently, eBay has responded in a big way: by removing all their US ads from Google. Publicly, eBay insists it's just an experiment with ad dollar allocation -- but many believe it's a direct response to Google's "protest." Considering how much money eBay puts into Google's bank account, this isn't a small deal. This is a warning shot from eBay to Google that becoming too directly competitive could mean that one of Google's top ad buyers will move somewhere else. If it's true and if eBay can really resist advertising through Google, this could have a huge impact on Google -- not just in the loss of so many ads, but also in driving down the cost auction price on ads where eBay has been an active bidder. This is a case where eBay may actually be in the power seat against Google and could cause Google a lot of pain. Update: As noted in the comments, Google has backed down and cancelled the protest. Looks like eBay has a bit of pull...

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  1. identicon
    Anonymous Coward, 14 Jun 2007 @ 2:30pm

    More than half of these comments, so far, have said that Google should start its own auction site (Id venture at a guess that Google would cleverly call it gBay). I agree that eBay needs some competition and Google is probably in the best position to actually be anywhere close to successful. However there has been no mention of Yahoo's attempt at an auction site. http://auctions.yahoo.com/ (http://auctions.yahoo.com/) If I remember correctly Yahoo started this endeavor when they were still on the level or more so than Google, yet Yahoo Auctions failed miserably. If Google wants to succeed they will need an extremely good business plan to entice new users to their site. I think one of the reasons Yahoo failed is there was not a large variety of items. eBay just dominated there...
    Google may succeed simply because the market has shifted to the point that eBay is loosing long time sellers due increased selling prices or poor/lack of customer service. People are looking for a new place to go, but there are almost no other options...

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