Commentary

eBay Hawks Ads

Given the fact that eBay charges a 10% commission on sales and collected some $2.4 billion in the 4th quarter, does it need to take ads?

Maybe not, but as eBay evolves out of the auction business and toward being a major retailer of new merchandise like Amazon, an Amazon-style advertising business was probably inevitable. eBay is stepping up its advertising business, including prohibiting advertisers from linking outside of eBay. They already so restrict their sellers. 

According to eBay , the company is undergoing a major shift in its ad strategy: The following bullet points are from an eBay spokesperson:

  • “eBay is undergoing a strategic shift in its advertising strategy, moving towards first-party data and offerings that will help brands drive commerce on the core eBay marketplace;
  • “As referenced in Q4 earnings, eBay Advertising has announced to its sellers that the company will be removing product listing ads (PLAs) in early May and instead, replacing that real estate with promotional listings. While we’ll still be offering display ads that drive users off eBay to a brand site, we’re doubling down on our on-eBay efforts. We’re in the process of building out display solutions that will drive sales on the eBay platform, rather than off. Our objective is to drive value for our brand partners, allowing them to reach customers throughout their shopping experience on eBay as well as gain insights into their customers who are shopping on eBay;
  • “We are bringing our sales team in-house and are currently hiring. The new team will be about 30 people, mostly client-facing sales representatives;
  • “Lastly, we are committed to aggressive retailing, and the promotion of retail moments to help brands generate and harness demand for new merchandise during holiday, seasonal and cultural retail moments such as Mother’s Day, Father’s Day and Holiday. These are can’t miss seasonal moments for brands, where they can natively integrate into eBay at the precise moments shoppers are searching for items that help them celebrate special occasions and meaningful moments in their lives.”

eBay says, “With our technology, we have the ability to find the most valuable impressions that intersect audience segments with real-time behavior signals of purchase intent,” and “brands have access to a channel of approximately $90 billion in sales and an audience of more than 167 million active buyers.”

That’s a lot to deal with. 

According to the eBay spokesperson, “Unlike other commerce platforms, eBay Advertising offers full data transparency about advertisers’ products on the eBay marketplace, sharing these insights for brands to leverage and execute smarter, and more effective campaigns.”

eBay says it is “in the midst of building a peta-byte-scale platform to store and process user, product and campaign data on top of one of the world's largest Hadoop clusters.” (According to Wikipedia, a Hadoop cluster is a “special type of computational cluster designed specifically for storing and analyzing huge amounts of unstructured data in a distributed computing environment.”

Certainly, eBay is in a great position to know what its 167 million users are interested in, in just as valid a manner as Google. Recode notes that one competitor, Alibaba’s Taobao, does not charge a commission or a listing fee, but is an advertising powerhouse. Perhaps eBay’s long-range plan is to move in that direction. 

I should add that I sell antiquarian books on eBay, and my brother recently signed on as a blogger for eBay Motors. I know the business pretty well, and I would bet that they know a lot about me. From the programmatic standpoint, this matters.

I am also guessing that most people who read this have bought and/or sold on eBay, meaning they know a lot about you as well. eBay is rapidly moving away from its original auction model, towards fixed price listings, just like Amazon, and more towards new, rather than used, merchandise. As it becomes more like Amazon, it makes sense that they will work with brands like Amazon does.

Correction: An earlier version of this column referred to eBay's audience as 167 million "registered shoppers." The correct term is "active buyers." 

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