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September 18, 2009

eBay takes a step backwards - quietly expanding the adcommerce system to off-eBay advertisers hTh

A retailer we work with for Comparison Shopping Engines (CSE)s recently emailed as they were really confused about a promotion they were sent by eBay pictured here:


Adcommerce_expansion
The retailer had lots of questions - should they stop their plans to sell direct on eBay, how does the system work, what's the ROI vs. other CPC channels like search/cse, etc.

Before we dig into what this means, let me backtrack for a second and explain the eBay AdCommerce system which is at the heart of this promotion.

About eBay AdCommerce
There are essentially 5 ways to advertise on eBay:
  1. Transactional- list a product for $x, pay $y in final value fee when it sells model.
  2. Yahoo! powered banner ads and sky scrapers on the homepage/SERPS.
  3. Yahoo (now Google) powered sponsored links on null search results.
  4. AdCommerce product links at the bottom of SERPS
  5. Your own custom deal (e.g. UPS,  McAfee, USPS, etc.) where you pay eBay big $$$ to sponsor a part of the site or for an exclusive or something. 

AdCommerce is eBay's third or forth attempt at a cpc on-ebay system and it seems to be sticking as they are clearly expanding it.  The way it works (before this expansion) is eBay sellers sign up and pay a CPC for traffic to their eBay items or eBay store.  Thus we typically say it is an 'in network' system as it doesn't shuffle traffic off eBay like the sponsored link, banner and custom deal programs do.  In a transactional system, staying on-site is good.  In a search engine system (e.g. Google), staying on-site is bad as you aren't finding what you are looking for.

We don't recommend AdCommerce to our customers because it lacks the basic closed-loop tracking that you MUST have for any CPC system to be measurable.  For example, you can't go buy some traffic, send it to an eBay item and then know how much of that traffic converts into orders.  This is because eBay doesn't give the advertiser the conversion data, they just give the number of clicks and impressions which is essentially useless.  Plus this CPC is on top of the already generous take-rate (listing fee and fvf) charged by eBay.

We're also not fans of the program because:
  • I personaly find the ads are 90% of the time not relevent when I'm shopping on eBay.
  • We have data that suggests that when these ads live in front of the page navigation system it keeps buyers from going to page two of search results.  I frequently tell users that this system has single handedly killed page 2 of eBay search results so everyone now has to focus on page 1. 
Think I'm being too harsh?  Here's a screen shot of some AdCommerce ads I was shown today when looking for an apparel item:

Adcommerce_example
So here we have:
  • Pens - totally irrelevent 
  • Cell phone case - also totally irrelevent 
  • Work boots (at least in the category but I was looking for a sweater)
  • A slim shop ad with a blatent typo (expect nothing liss) 
  • A hulk t-shirt (ok I guess the same category?) 
These ads are bigger than the eBay results and push the page nav down.  In other words, eBay would rather you click on this vs. going to page 2 from an economic standpoint.  But is that what is best for the consumer?

AdCommerce goes 'out of network'
Circling back to the new promotion that was sent to an off-eBay retailer above, it looks like eBay is now looking to expand the program to allow 'off eBay' ads via shopping.com into AdCommerce.

The way I imagine this would work:
  1. Retailer specifies which of their shopping.com products they want to advertise
  2. Retailer specifies a CPC for the program or maybe even at the product level
  3. eBay shows off-eBay ads on search result pages.
As stated in the title, I think this is a big step BACKWARDS for eBay.  We were excited to see them announce they were taking the banner page off of SERPs and some of the irrelevency caused by the featured program.  But here we are a short time later seeing them seemingly talking out of both sides of their mouth and not only increasing a program that decreases the relevency of the search results, but now will also include taking buyers off eBay!

eBay needs to do some soul searching and decide what they want to be when they grow up - transactional or advertising (cpc/cpm) based?  Do they want to truly show the most relevent products or do they want to focus on the pure short-term economics?

Stay tuned

We'll be on the lookout for more information about this program, specifically:
  1. Is there closed-loop tracking available?
  2. What is the ROI?  
  3. Is this actually a cheaper way to sell on eBay than selling direct?   
  
SeekingAlpha Disclosure - I am long Google and Amazon.  I am CEO of ChannelAdvisor where eBay is an investor.



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