EcommerceBytes-NewsFlash, Number 1568 - June 25, 2007     1 of 4

eBay Cites Privacy Concerns in Ban of Google Checkout

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eBay renewed its advertising campaign on Google AdWords US on Friday afternoon after having pulled the ads for 10 days. eBay spokesperson Hani Durzy said the spending will be "significantly less than before," but also said the paid-search advertising is not static and would fluctuate.

eBay said the 10-day suspension was part of a marketing test. "From our point of view, it was a very successful test, we learned a lot, including that we are not as dependent on Google Adwords as some may have thought. Turning it back on was always our intention." Durzy said the length of the test was deliberately designed to coincide with a full-auction cycle in order to get statistically significant results - eBay auction listings can have a maximum duration of 10 days.

The timing of the test came after Google had invited attendees of eBay's annual conference to an off-site party to learn more about Google Checkout, a payment service that lets sellers accept credit card payments from shoppers. Google marketed the party as a way for sellers to learn about the service, and also to protest eBay's ban of Google Checkout on eBay.com and its cessation of talks to integrate Google Checkout into eBay's ProStores web-hosting service. Other companies who have been barred from exhibiting at eBay's conference have had off-site events in previous years, including Overstock.com, Alibaba, and PayPal.

The spat between the companies escalated and resulted in Google canceling the party and going silent to media inquiries, and in eBay publicly chastising Google for crashing its conference. On Friday, Durzy called the way Google marketed the party "inappropriate."

Not mentioned in the media brouhaha was Yahoo, which eBay allowed to exhibit at the conference, and which also held an off-site party during the conference. Yahoo's party was held in conjunction with PESA, an organization of high-volume PowerSellers, which had entered into an agreement with Yahoo to promote Yahoo PayPal Checkout, a service similar to Google Checkout but which uses eBay's PayPal service.

When asked how he would classify the relationship between Google and eBay considering the dust-up over the Google party and the marketing test, Durzy said "complex" and said it has always been that way. The companies are valuable partners and continue to be. "Google remains our valuable partner and delivers text ads on the international sites and continues to drive good traffic to the eBay site - even during the marketing test, it drove traffic through organic search, natural search."

Durzy continued, "Google has attempted to make forays into areas beyond their core competencies, some into areas we've been doing for more than 10 years. We are paying close attention to anyone who tries to deliver the same things we provide to our buyers and sellers. We haven't seen an impact on the areas of our business. We've said that before." Durzy said Google Base drives traffic to eBay, that Google Checkout is not the same as eBay's PayPal service, and as for Google Talk versus Skype: "just look at the user numbers," he said.

Some eBay sellers reported a decrease in page views when eBay pulled its ads from Google. Durzy said eBay is not releasing specific results of the test publicly, but said it varied widely. "The connection to what a handful of sellers were seeing and what we were seeing is unclear at best."

Durzy said its top seller team has been talking to sellers. Bids per active listing in some cases were up, in some cases were down, and Durzy said metrics are also affected by seasonality (this time of year is traditionally the start of a summer slowdown compared to other times of year) and by what sellers are listing.

"It's important for us to drive valuable traffic, bids and sell through. The goal (of the test) was to see how to make the marketing spend more efficient." Durzy said eBay's goal is to maintain the marketing spend and get more traffic. He said that while eBay will not spend as much on AdWords as it did prior to the test, eBay is reallocating that portion of the budget against other multiple efforts that in combination drive more valuable traffic.

Durzy said that traffic is up according to third-party measurements. "Some sellers reported having fantastic weeks, others reported the opposite." He said some people were under the impression that eBay took the money that would have gone into the Google AdWords program and put the money in its pocket. "We took everything and put it in other channels and other paid-search providers."

As for eBay's ban of Google Checkout, Durzy said eBay's concerns about Google Checkout and its historical track record are still legitimate. And, he said, there is another issue why eBay does not allow Google Checkout on the site, that of "serious concerns about privacy issues raised by other parties." Durzy said Privacy International recently released a report and has commented on how Google handle customer data.

"If there are significant concerns about how a vendor is going to handle consumer data, we'll be reticent to allow people to market that service on our site."

A Google spokesperson responded on Friday to our inquiry about eBay's ad campaign: "We can confirm that eBay is buying keywords through AdWords. Over the last seven years, we have worked closely with eBay to drive customers to their site and build value for their business and the business of their sellers. We look forward to a continued partnership."

However, Google has not yet responded to our inquiry about the privacy issues eBay raised, and a search on Privacy International shows its report (http://tinyurl.com/2mgq6a) was controversial. Google also has said as recently as this month that Google Checkout has been adopted by over 25% of the top 500 US retailers.

Note from the editor: While many are following this developing story form various angles, we continue to focus on the impact on sellers. Let us know what you think by posting your comments here, and be sure and listen to what other sellers have said on the AuctionBytes Hotline Podcast (http://podcast.auctionbytes.com/cgi-bin/podcast/pod.pl?/pl/2007/6/1182343235.html).


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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