EBay to Google: we're back and smaller than ever

Stan Beer
Sunday, 24 June 2007 14:16

Opinion and Analysis

The EBay boycott of Google AdWords advertising is over as many predicted it would be. However, EBay says it will spend less of its budget on Google advertising and more on rival search sites, such as Yahoo, AOL and MSN.

As market watchers had predicted, EBay's AdWords pullout in retaliation for a party that Google had planned to stage during EBay's annual sales conference did not last long - just 10 days. Many believed that to suggest that EBay could afford to do without the traffic that Google drives to its site was nonsense.

Despite this, EBay, backed by statistics from web analytics firm Hitwise, maintains that EBay's traffic actually increased slightly during the 10-day hiatus from Google. Therefore from now on EBay considers that it less dependent on traffic from Google AdWords than originally thought and will allocate more of its budget to rival search engine marketing providers.

However, skepticism that EBay will be able to sustain an online marketing program that does not allocate the lion's share of its budget to Google continues. Google has almost 60% of the search advertising market and continues to put further distance between itself and its rivals. Any marketing program from EBay that does not accurately reflect Google's reach would be viewed dimly by the market, not to mention shareholders.

For the time being EBay is continuing with its bluster. But with each passing day, the likelihood the Google advertising spend will return to its previous state increases. For Ebay, like other pure online players, Google is now inextricably entwined with the company's business model.