eBay Takes a Step Backwards

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

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! (YHOO) 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:

• We 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 when looking for an apparel item:

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?

Disclosure: I am long Google and Amazon. I am CEO of ChannelAdvisor where eBay is an investor.

Comments

[Patricia013:]

I'm pleased to see you state
"eBay needs to do some soul searching and decide what they want to be when they grow up - transactional or advertising (cpc/cpm) based?"

My feeling is that the past 1 1/2 years have shown Ebay to not have good business sense and to have come out with plans that are definitely foolish and immature. Driving business off site without even allowing the buyer to browse thru pages on ebay's site is not only foolish and immature, its suicidal!

Sep 20 04:34 PM

[redbaron:]

As a seller, it is now becoming much more obvious to me why my sales have recently tanked. If this continues, I am going to have to make some serious decisions about my long term relationship with this company. I am paying listing fees, and buyers are not even seeing my listings when they search for my items, or so it seems to me. If I am some how mis-understanding what all of this means, Scott, please straighten my out, but it seems to me that much of the poor selling results I have seen in recent weeks, you have just explained. Buyers are not seeing search results that show them my listed items, when they search for listings with my titles in their stated searches.

Sep 20 06:45 PM

[755:]

After 13 years on eBay (as a buyer) I started selling on eBay. It has been nightmare. eBay has completely lost it. Prices have gone up sharply while the amt of unique interesting merchandise has declined. The reason : fees are outrageous and the eBay bureaucracy is totally out of control. 10 years ago I spent as much as $100K a year on ebay. Today its under $10K and declining. ebay has lost contact with its buyers and its sellers. Its the GM of the next 20 years.

Sep 21 12:28 AM

[leapingcat:]

As a buyer, and I am one as well as a small-scale seller, I want to find exactly the item that I am looking for, and quickly. Anything that hinders that, including adverts which are usually irrelevant and reduce the amount of listings that I can see on any page makes my 'buying experience' worse. Ebay claim to be wanting to put buyers first, but I can see no evidence of them putting anyone but themselves and their greed first.

Sep 21 05:27 AM

[Philip Cohen:]

I'm looking forward to hearing "Noise" Donahoe spin the reasons for the further reduction in markeplaces revenue and the further devastating effect that is going to have of profits. 21 October is going to be a most interesting day.

In the meantime some more food for thought …

Shill Bidding on eBay: Case Study #2

Shining some light on the more sophisticated and therefore harder to detect shill bidding activity by some “professional” sellers on eBay auctions

Not another case study on shill bidding on eBay auctions? Yes, sorry, another one. This time a spreadsheet analysis of multiple auctions, from some "professional" sellers from the US and Australia. Needless to say the analysis demonstrates, once again, that, contrary to eBay's claims, shill bidding by many “professional” sellers is rampant on eBay auctions. The full comment and spreadsheet download links at:
www.auctionbytes.com/f...

Sep 21 08:32 AM

[a. palmer jr.:]

Ebay's just like any other company or our government...say whatever it takes to keep the people happy and the money rolling in. Then they continue doing what they were doing.

Sep 21 11:00 AM

[convex:]

Want some REAL information about Ebay ?...Checkout Glassdoor.com. A company that has an impartial system that lets Ebay's own employees rate how well it is doing as a company and how good a job they think CEO [ John Donohue ] is actually Doing... direct from the horse ...

Sep 24 02:24 PM