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June 20, 2007

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

Boxing_3In 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:

M062007 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.



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