Google, Microsoft and Yahoo are all vying for the right to post their keyword advertising in front of Ebay’s millions of online users, signaling a scramble between the search engine providers for access to one of the internet’s biggest untapped audiences.
Ebay, which boasts one of the largest audiences on the web, does not currently carry advertising on its web pages, making it an attractive distribution partner for all three search companies. Also, a high proportion of its users visit Ebay to look for items to buy, making them good prospects for advertisers searching for sales leads.
Ebay is understood to have held talks with all three companies about ways to co-operate more closely, including carrying targeted messages supplied by one of the companies’ online advertising networks. The online auction company refused to comment on the talks.
One of the very un-leveraged assets of Ebay is all the traffic that goes un-monetized on their sites, said Youssef Squali, an analyst at Jeffries & Co in New York. “They are one of the largest destinations on the internet, and their sites are very ‘sticky’ – that is the type of platform advertisers would kill for.”
Microsoft has been activating its own keyword advertising network in recent months, opening a new front in its competition with Google and Yahoo, which currently dominate the business, and triggering a scramble for wider distribution.
Prompted by the chance to extend their advertising networks, the three search companies are understood to have approached Ebay separately in recent months with proposals for closer co-operation.
At the same time, Ebay has used the talks to discuss deeper partnerships that would extend the reach of its own services. That includes negotiating with the search companies over ways to design Ebay’s product listings so that they appear more prominently in the results returned by the search engines. Known as “search engine optimisation”, this practice has been controversial, since it raises the risk that the supposedly unbiased search engines will favor some results over others.
The tussle over a partnership with Ebay echoes last year’s fight between the search companies for an advertising alliance with AOL. In the event, AOL agreed to renew an existing relationship with Google, which at the same time invested $1bn for a 5 per cent stake in the Time Warner online business.
Mark Mahaney, internet analyst at Citigroup, added that eBay also collected data about its users’ purchasing habits, valuable information that is beyond the reach of companies like Google, adding to its attractions as a partner for the search companies.
However, the growing rivalry between Google and eBay is “not news,” added Mr. Mahaney of Citigroup. “Google has in a way been an indirect competitor for a while, because they are an indirect marketing tool for merchants” who might otherwise use eBay, he added.
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