Google-eBay Rivalry Heats Up - Turning Point in 2006?
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If you look over the news as I did researching this story, you’ll see that a lot of interesting things happened in 2006. First, let me point out the obvious: somewhere along the line, eBay started advertising heavily on Google. I couldn’t discover when eBay started doing this, but the online auction giant has been the search engine’s biggest U.S. advertiser for years. Its ads showed up on Google more than 188 million times this March alone. That’s more than double the number that showed up for Google’s second biggest U.S. advertiser.
And eBay sees quite a return for its advertising. Deutsche Bank analyst Jeetil Patel believes that eBay may get as much as 20 percent of its web traffic from Google ads. Google, in turn, sees $25 million per quarter in ad revenue from eBay. That’s significant, as you’d expect, but it’s worth keeping in mind that Google made nearly $3.7 billion in revenue in its latest quarter for comparison.
But back to 2006. Almost exactly a year ago, eBay announced its intentions to enter into the keyword advertising business -- Google’s bread and butter. The auction company’s intention was to allow eBay sellers to promote their auctions on other web sites. Dubbed eBay AdContext, the program would allow web sites to embed snippets of code that will show ads for auctions. Users of the system would run contextual ads so long as they allowed eBay a cut from the sales proceeds.
Just three months later, at the end of August 2006, eBay agreed to start running Google advertising on its international web sites. This was done in the face of a horrifying stock performance for eBay; by some accounts, the auction company’s shares were headed for their worst performance in six years. The ads from Google started appearing on eBay in early 2007.
So eBay seemed to shove a wedge between itself and Google in June 2006, while the two companies partnered three months later. Between those two events, Google did its own share of wedge insertion with Google Checkout. I covered it back when it was just a rumor and called Google Gbuy. Many believed the service would compete with PayPal. In fact, the way it’s set up, it can compete with PayPal, but it’s intended more as a clearinghouse: vendors who accept payment through Google Checkout can accept several forms of payment, including PayPal at least in theory, while buyers can pay in several forms. The whole idea is to reduce “paperwork;” if you buy stuff from five different merchants, you don’t have to fill out five different online forms if all of them accept Google Checkout and you are set up to pay through Google Checkout. Here’s a link that will give you more information; if you click on the help link on this page, it will take you to frequently asked questions.
Next: The War Escalates >>
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