EBay needs Google more than Google needs EBay

Stan Beer
Thursday, 14 June 2007 19:49

Opinion and Analysis

It's all very interesting this business about EBay cancelling its Google Adwords advertising in a huff because Google got a little too aggressive promoting its Checkout online payment service to EBay's PayPal customers. But it's sheer bluff and will be short lived because EBay needs Google more than Google needs EBay and both companies know it.

From all reports, EBay is Google's biggest single customer, spending tens of millions each year on Adwords advertising. However, Google has literally millions of customers and, with revenues of about US$11 billion, EBay probably constitutes significantly less than 1% of its income. So if it came to the crunch, the loss of EBay would be little more than a blip on Google's financial radar screen.

On the other hand, EBay relies heavily on the traffic that Google sends to its site. By most estimates, EBay gets as much as 20% of its traffic from Google. Could it afford to lose that traffic? Not likely.

EBay could of course take its business to Google's search marketing competitors, Yahoo, Microsoft, Ask.com and so on. They would all welcome EBay with open arms. But EBay knows that Google can probably deliver twice as many eyeballs to the EBay site as all of its competitors combined.

The inescapable conclusion is that like it or not if you have a business that relies on getting traffic to your website, Google may not be the only game in town but it is by far the biggest. EBay is about to become demonstrable proof that there are very few web brands sufficiently powerful to simply ignore the traffic that Google can deliver. Look for a resumption of a business relationship between the two web giants sooner rather than later.