GoogleBay, Or EGoogle?

As of today, eBay will be turning its search ads on within Google -- ending a spat between Google and one of its largest advertisers that's drawn comparisons to a lover's quarrel.

But while the ad standoff may be over, the rivalry has really just begun. EBay and Google, after all, are starting to look more alike every day, and they're headed towards a very similar future. And as their turf continues to overlap, we'll see the eBay-Google spat as a lot more than a tiff -- we'll recognize it for the opening volley in the next great Internet war.

A quick comparison of where Google and eBay are headed will show you what I mean.

Google, the eTail Platform

The first point to consider is that search advertising programs aren't true advertising programs. They're platforms that connect buyers with sellers. Buyers request products or services, and they're shown suppliers who can fulfill those needs. Which suppliers are matched with a buyer is determined, largely, by auction.



And Google's Pay-Per-Action program pulls ads still further away from what we traditionally think of as ads. By driving a particular interaction with the advertiser's business -- be it an e-mail signup or even a sale -- Pay-Per-Action is closer to a shopping cart service or a CRM system than it is to an ad system. Ads tell buyers about businesses; Pay-Per-Action ads live, at least partially, within the businesses themselves.

Currently, Pay-Per-Action lives within Google's content network, not on Google Search. But the program is expanding: last week, Google launched Pay-Per-Action in 24 languages. Expect to see Pay-Per-Action on Google SERPs within the next two years.

Finally, Google Checkout -- Google's payment system and PayPal competitor -- allows Google to serve as the system through which businesses collect payments.

When you add it all up, you get the following picture: Google is a service that uses auctions to match buyers and sellers, and which creates an environment allowing an entire transaction to happen -- from initial contact to final payment. Which, to me, sounds a lot like eBay.

EBay, the Search Engine

If Google is becoming eBay, the same can be said in reverse: EBay is becoming Google.

EBay, at its core, is really a product search engine. Whatever you're looking to buy, you can find it in eBay's site search feature. A visit to even places your cursor within the eBay search bar immediately.

Over the coming months, look for eBay to become still more like a typical engine. While eBay currently features search results based on auctions' expiration times, Bog Tedeschi reports in The New York Times that eBay is looking to deliver relevancy-based search listings, based "in part by how well sellers have been rated by other buyers."

Once eBay acts more like a typical, relevancy-based search engine, eBay -- not Google -- may become the new leader in the product search sphere. Google may stay far ahead in share of searches, but eBay has the power to gain far more conversions per search than even Google can. And it's conversions, not searches, that ultimately earn money for search businesses.

The Two Futures are the Same

It's not just that Google is turning into eBay, and vice-versa. Both companies are headed to a collision course in the new horizon of auction-based advertising.

Google's realized that, if it can sell one type of advertising in an auction, it can do the same with many other types of ads -- including print and radio. EBay, for its part, understands that advertising has become a new commodity, which means that eBay can sell advertising through auction just as it sells nearly every other commodity imaginable through auctions. Enter the eBay Media Marketplace, eBay's auction marketplace for buying and selling traditional ad inventory.

The Future is the Environment

Taken together, all of this spells a very different future for the business of search. If Google and eBay continue on their current course, the search business won't just focus on ads: it will be a business of automated sales environments, in which auctions serve as the gateways, but those environments reach every touchpoint from initial contact to sale.

As the current leader in search and auction-based advertising, Google clearly has an advantage in that future. But eBay is the leader in auction-based business environments, so don't rule it out.

Indeed, eBay is already giving Google a real challenge. The eBay Media Marketplace -- created at the request of major advertisers like Wal-Mart and Toyota -- already has a TV network partner in Oxygen. Google, meanwhile, is still talking about entering the TV business as a long-term dream. So whoever wins, both eBay and Google are in for a long, hard slog.

In its pro-Checkout "Let Freedom Ring" party, Google borrowed symbolism from the American Revolution to challenge eBay. By comparing eBay v. Google to armed conflict, Google may have hit closer to the mark than it realized. Google must have sensed that both parties are in for a long, hard slog.

Correction: Friday's Search Insider incorrectly stated the number of people in the U.S. who are members of a racial or ethnic minority. It is actually a bit more than 100 million, not 300 million.

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