FAQ: What was the impact of eBay pulling Adwords on your sellers? Part II/II

In my last post, I went through some math that shows our estimate that eBay gets 20% of their uniques from Google Adwords.  This lays the foundation for answering the ultimate question: "What has this done to sellers/gmv on eBay?"

One more caveat before we go into that.  As many of the media reports mentioned, just because eBay stopped spending their $8m/m on Google for week, doesn't mean they didn't deploy those $ elsewhere.  One thing I do disagree with is that eBay probably didn't put those $ into Yahoo Search Marketing/MSN, because I think those programs are fully funded/maxed out on ROI at all times, but I bet they put them into graphical/banners.  Anecdotally, I did see an increase of eBay banners (they usually have IT branding and some kind of product selector/interactivity) across yahoo, cnet and aol networks. So eBay could have covered up the dip in uniques by blasting some banners.  In other words, just because I think eBay gets about 20% of their uniques from Google, doesn't mean that turning off Adwords would result in a 20% dip, the drop can be covered to some degree by other channels.

All that being said, we have had reports from about 10% of our top-sellers (100/1000) that they saw a material 20%+ drop in sales the day eBay stopped buying Adwords last week.  We've gone in and verified that this is indeed the case.  What's interesting is these businesses typically share several things in common:

• They are in "practicals" categories (non-collectibles)
• They tend to have a higher fixed-price component than auction
• They are concentrated in long-tail style businesses (lots of skus vs. narrow skus) such as sporting goods, BMV, some auto-parts and apparel.

Interestingly when we look at our overall GMV, there are enough sellers that came up during the same time that it washed out overall. (For example, consumer-electronic businesses did well in the week).

Taking these datapoints, it supports my thesis that eBay supplemented the loss of google traffic with some less-specific/targeted/long-tail traffic (probably banners) and that lifted the tide of the overall eBay ocean, but there were definitely areas that suffered a low-tide effect from the AdWord "test". 

My advice to those sellers who WERE impacted is this is a wake-up call to start exploring your own long-term AdWord campaigns.  If it's working for eBay, it will work for you and your ecommerce store.  So that I'm not accused of being self-serving here as we of course have software for managing search, I'll even suggest going out and testing it using the Google Adword toolset, which is a great way to get started.  eBay has shown you that they are driving a big chunk of your business via adwords and its time to take that part of your destiny into your own hands.

We'll continue to report any interesting data that we see here.  For example, those businesses that are still primarily auction/bid based, they don't typically see impacts to their business for a week (due to the average 7-day duration time).

One last point, the eBay listing impact is going to be interesting, because the sellers that were impacted have pulled back HARD on listings.  I'm not sure mix-wise if this will be enough to show up in the macro listing data from a , but I'd be shocked if analysts that track listings don't see a material dip in sporting goods, BMV and apparel due to the AdWords drop.  Here's another datapoint that supports that feedback from the medved auction counts:

In the medved listing data you see the listings hitting one of their lowest points in the year on June 18/19/20 and you can see the drop start right on 16th.  Typically top-sellers take 24-48hrs to react to things and I believe the sequence of events was:
June 12th - eBay stops AdWords
June 13/14 - first two full-days without
June 15-18 - select sellers see drop, start pulling listings

If readers have any supporting or non-supporting stories about your eBay traffic, feel free to post a comment.  Inquiring minds want to know what your impact was.

Comments

[ryan]

One other quick point - the drop in listings was due to the pre-anouncement of the fee reduction - sellers held back inventory. It was one of the first times that eBay has given so much notice about a pricing promotion and the drop in listings you noticed is exactly why they typically wait until the day before to inform sellers about promotions.

[David Hooper]

Our ebay sales have dropped drastically in the last week. They are off by about 30%. After talking to our ebay rep this today, he was told to tell all his clients that the whole ebay vs google thing was blown way out of proportion. The company line he was told to give was that Ebay dropped Adwords to help measure the effectiveness of Yahoo and MSN. (Does ebay really think that its sellers are that dumb?). He also said that they are getting back onto Google very soon, "like almost immediately" (but he couldn't elaborate because that was all he was "authorized to discuss").

How is this affecting other sellers (especially media sellers)?

[S.J. Davis]

I have been selling apparel, mostly through 7 day auctions, for over 7 years on ebay, and noticed a large drop-off this week. The number of bids per listing was down to an average of 2 per listing. The biggest difference was in Unsold Items. Most weeks my Unsold Item percentage is 20%, but this week it was exactly 50%. An alarming trend if this continues!

[Mark Vane]

Hey, I recently added a news widget from www.widgetmate.com to my blog. It shows the latest news, and just took a copy and paste to implement. Might interest you too.

[halloyellow]

hi. i just noticed that recently I spend most of my days on the internet since I'm into web business.... I was actually also tracking down traffic on Ebay for the last few days inorder for me to post my items...but to my dismay there are less bidders than usual and base from my experience june up to mid december there are lots of traffic/bidders on ebay since thanksgiving will be in few months, summer is here, holiday season, halloween etc etc... and basically people are buying stuffs/gifts for this occasions but not that much of bidders lately. When I search for an item lately Ebay.com will always be on top but now...less of it... so I guess there is really a huge impact. As a search engine Google is better than Yahoo... maybe because most users find it easier to use and usually whatever topic/item you are looking for google has always an answer.

[rajiv mehta]

during this time when adwords were pulled down.Bidding activity on no reserve auctions saw tremendous drop and most of the listing during those days went in with hardly any profit.