Commentary

Three Reasons Why eBay Is Wrong About Paid Search

Recently Harvard Business Review asked the question: “Did eBay Just Prove That Paid Search Ads Don't Work?” According to HBR, eBay conducted a study of paid search marketing habits and found that paid ads are not worth their expense and were focused on consumers who would shop on eBay regardless of whether they saw paid ads. Speaking generally, eBay suggested that brand-keyword ads have no short-term benefits, and that returns from all other keywords are minimal.

I’m here to offer a rebuttal to eBay’s study. Here are a few reasons why you should take eBay’s findings with a grain of salt:

1)    It’s apples and oranges. eBay, one of the world’s largest companies, conducted its experiment using its own trademark terms. It’s short-sighted and wrong to assume eBay’s results would apply to all brands. Unlike eBay, most brands are not the sole destination on the designated path to purchase for most consumers; therefore, their chances of getting coincidental clicks are significantly less.  It’s also worth noting that eBay has very few direct competitors in their space, and thus don’t have to worry about others “conquesting” their trademark keywords by buying paid search ads on searches for “eBay.”

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(The authors of eBay’s study further prove this point themselves, as they write (bolding is mine): “Only a relatively small fraction of consumers are unaware of the [eBay] brand, or have used it infrequently enough to not fully understand the scope of its offerings. It is this small set of consumers who are impacted positively by ads because of their interest in purchasing once they become informed of the products and prices offered.”)

In our experience, trademark paid search does have substantive benefits. When trademark paid and natural search were live together for a major department store client,, the site captured about 18% of the traffic that previously clicked on competitor ads, leading to a 27% revenue increase per day. It might not work for eBay, but for other brands trademark paid search pays off.

2)    eBay doesn’t have promotions or seasonal messaging. These types of messages are the core value propositions of paid search trademark keywords. Running paid search on brand keywords has little value for eBay, therefore, since its messaging doesn’t change. For other brands, seasonal promotions and messaging around events (such as holidays) can be big revenue drivers.

3)    Observe the rules of remarketing. One of eBay’s key arguments seems to be that paid search dollars are wasted on users who have already been to your site. This is flawed thinking. A new feature Google is currently beta testing called ‘Remarketing for Search Ads’ allows brands to adjust messaging, bidding, and positioning for users, based on A) whether or not they have been to your site, and B) which pages they have visited if they have been to your site.

This allows advertisers  only to target users who’ve not been to their site, but are searching on relevant terms. And it’s in this case that a trademark presence is so critical, allowing companies to control messaging and ensure users have a good first experience with the brand.

There are many other factors that influenced eBay’s results, such as keyword selection, ad copy, use of Keyword Insert, match type strategy, and so on. Don’t just assume eBay’s results are applicable to your paid search efforts. All advertisers can and should run tests to determine paid search’s value and place in their marketing mix. Also, don’t be too quick to eliminate trademark keywords, as trademark paid search can offer strong benefits in collaboration with natural search and for your overall business.

3 comments about "Three Reasons Why eBay Is Wrong About Paid Search".
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  1. Jonathan Hutter from Northern Light Health, March 29, 2013 at 10:53 a.m.

    Excellent points all. One thing I would assume is that an organization that conducts and publicizes a study such as this likely has an agenda that they are trying to advance through these results.

  2. Drew Van Lahr from Zenya, March 29, 2013 at 12:36 p.m.

    We reached a similar conclusion: http://j.mp/YKtptS

    I don't think anyone doubts the veracity of their study, but while eBay thinks their results are indicative of the paid search industry as a whole, it seems most people with any PPC or SEM experience understand the study tells us more about eBay and their failed process.

    And, like the above comment says, the way they attacked paid search is so forceful that something must be going on behind the scenes.

  3. Dorota Umeno from Confluence Digital, LLC, March 29, 2013 at 3:25 p.m.

    Nicely written rebuttal. This reminds me of the GM study a few months ago that concluded that Facebook advertising does not work.

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