• by June 12, 2006

Online auctions giant eBay says it will launch a keyword advertising system called eBay Ad Context for its sellers to promote auctions on other Web sites. The online auctions provider will allow Web site affiliates to run contextual ads for eBay auctions in exchange for a cut of eBay sales.

In making this move, eBay takes its cues from of Google and Yahoo. Still, its plan differs from rivals' pay-per-click advertising systems; eBay's system will link only to eBay auctions and won't become a generic advertising network. The system will allow Web sites to embed bits of code that will enable items for sale to be automatically showcased for sale on eBay's site.

The items that appear in any specific ad are determined by the keywords on that Web page. As listings change on eBay, the ads will automatically change on affiliated Web sites to reflect the new products or services for sale on eBay. Web site affiliates will receive a cut of 40 percent to 70 percent of sales, depending on volumes. It remains to be seen just how eBay's system will impact Google, Yahoo, and MSN's online ad networks. Of course those systems are handling all sorts of contextual advertising; eBay's is limited to eBay auctions. Of course, that could change--depending on the success of eBay Ad Context.