eBay / Google Ad Deal Takeaways

There are a number of takeaways from the announcement this morning that Google will be the exclusive provider of text ads on eBay’s non-U.S. auctions:

  • Ebay is worried about having no ad network when its competitors do. By farming out the U.S. business to Yahoo and the non-U.S. business to Google it trying hard to protect itself, which may work in the short term, but is a dubious longer-run strategy.
  • Short-term, I’m surprised that this will not affect eBay’s 2006 or 2007 results. The upshot seems to be that eBay will only start testing the arrangement in early 2007, so that puts 2006 materiality out of reach, leaving 2007 still possible. So why no impact there? eBay is clearly planning to go slow, perhaps keeping its options open with respect to ad networks.
  • If needed, this is a lovely example of how every software service is also a media service. While it took eBay too long to get over itself, any high-traffic application that does not also run ads is passing up material revenues, and its shareholders should take it to task.

Related posts:

  1. Google to Launch PayPal-like Service — eBay sez Oh-Oh
  2. Microsoft / Ebay
  3. The Disaggregation of eBay
  4. Ebay, Trolls, Orcs, and Patent Law
  5. eBay: Too Big to Fail?

Comments

  1. “any high-traffic application that does not also run ads is passing up material revenues, and its shareholders should take it to task.”
    I’d like to see more data on this. While you are probably right, when you run ads you give up realestate and make usability trade offs that may have more of a long impact on your numbers than may be apparent at first blush. eBay built eBay didn’t they? Part of the appeal for users has been lack of ads. Isn’t lack of ads a community first approach and therefore a good thing long term? I’d say yes, but again, I’d like to see some real numbers on this…and let’s not forget when google runs ads in their free apps, they have no middle man therefore their margins are not comparable (read HIGHTER) than other apps who run Google’s ads….