Jun. 15, 2007
Last week, giant eBay has completely stopped buying Google AdWords in an apparent retaliation for
a now-canceled event meant to create support among eBay vendors for Google Checkout. Overall, this is
a sign of the growing tensions between large Internet competitors.
This little 'war' began when Google announced it would hold an event that coincided with the
beginning of eBay Live, the annual gathering of eBay sellers and affiliates taking place in Boston.
Meanwhile, eBay has since confirmed that it had shifted its ad spending away from Google AdWords,
the search giant's paid keyword program. eBay called the the move as part of an "ongoing experiment"
to test-drive various advertising options, and occasionally shift its mix of media buys.
Google's gathering was planned at encouraging eBay sellers to demand the auction site allow
the use of Google Checkout, its online payment system. As could be expected, eBay has strongly
urged its sellers to use its PayPal service as the preferred option for closing auction and fixed-price
sales, and has not opened the site to Checkout.
The timing suggests eBay was very upset about Google's event, appropriately dubbed the "Google
Checkout Freedom Party."
The auction giant reportedly cancelled all its ad purchases by June 6, early in the morning.
Later that day, Google nixed its own planned event in Boston through a blog post from Google
Checkout Team member Tom Oliveri.
"eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we
certainly didn't want to detract from that activity," Oliveri wrote. "After speaking with officials
at eBay, we at Google agreed that it was better for us not to feature this event during the eBay
Oliveri added "Google is constantly reaching out to new users and sellers, and we are available
to privately discuss any matters of concern with individuals as they relate to Google products."
The Google / eBay partnership has long been rife with tension, with each company eying many of
the same online opportunities.
For example, Google Base competes with CraigsList, the funky classified site that eBay has invested
in, and Google Checkout was initially planned as a huge competitor to PayPal.
Overall, eBay has partnered extensively with Google rival Yahoo, striking a multiyear deal
in March that called for the two to work more closely together in other areas as well, with the
Yahoo Wallet service using PayPal and with cooperation around new technology to take advantage of
eBay's Skype Internet calling service.
Google had hoped to use the concentrated gathering of eBay devotees to build support for Checkout,
apparently seeking to create grassroots support for opening up the auction site to the payment
alternative, which lets shoppers store credit card information and use a simple log-in and password
to make payments to merchants across the Internet.
Google invited eBay sellers to board a trolley and travel to an important site in
pre-Revolutionary history, the Old South Meeting House, for the meeting.
Google wrote in an invitation posted to the Google Checkout blog "we'll use the same place where
revolutionaries launched the Boston Tea Party to celebrate freedom with free food, free drinks, free
live music, even free massages."
eBay Live attracts many vendors who sell services and products to eBay users -- such as
automated auction programs and items to support their businesses. However, the event is mainly
a chance for eBay to foster a stronger sense of community among its users.
to your website will increase your search engine visibility
Every year, eBay treats its attendees to entertainment, motivational speeches and a keynote from
CEO Meg Whitman. According to both comScore and Nielsen//NetRatings, eBay is Google's largest
single AdWords customer in the U.S.
For 2006, comScore estimates that eBay spent nearly twice as much as the No. 2 AdWords customer,
Target. "RBC Capital Markets analyst Jordan Rohan says that "eBay spends around US $25 million a
quarter on AdWords. This is just a fraction of the $3.7 billion in revenue Google raked in last
quarter -- the vast majority of it from paid search listings.
Nevertheless, this little war is heavy with symbolism, especially since Google has claimed
that its Checkout service was not meant to compete directly with PayPal, which specializes in
small payments and those between individuals, rather than those between consumers and merchants,
said search expert John Battelle.
At the same time, eBay may get as many as 12 percent of its visitors through Google searches
each month, Battelle added, suggesting a co-dependence that eBay may have been trying to break with
the Yahoo deal.
Forrester Research analyst Carrie Johnson said "in many ways, all of the major Internet
companies have been converging on the same, increasingly crowded band wagon."
Johnson added "where once there were bright lines dividing major Internet companies, eBay has
since moved into Amazon's fixed-price retail world, while Google built itself up into more of a
portal to compete directly with Yahoo and AOL and added the payment functionality, which put
it on a direct collision path with eBay.
Across the industry, the potential for showdowns has grown substantially as each company has
moved into new areas through acquisitions, as well. "A lot of the partnerships now in place date
from a time when there was much less overlap and direct competition," Johnson said.
Source: eCommerce Times
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