eBay, oh eBay - Will you never learn?
I just read a post on Jochen Krisch’s excellent Exciting Commerce blog (it’s in German, here’s the english version of the blog — the article is not yet translated) about eBay’s latest foray into improving their crumbling business model. According to Caroline Malifaud from eBay’s Advertising Team they will introduce a new system for sellers to advertise their listings on eBay aptly labeled eBay AdCommerce in the next few months.
What AdCommerce will do, is to place keyword-based text ads on the search results page. These ads can be booked by eBay sellers on a CPC-basis and contain title, description, an optional image and link to the respective sellers listings. Ads are bought in an auction process (similar to Google AdWords) - the ad from the highest bidder will be displayed.
So far - so good. Plain, simple and horrendously stupid! First of all eBay will display the ads at the bottom of the search result page - pretty stupid if you want to optimize for clicks (the so-called below-the-fold area - everything below your initially visible area of a website - receives very little clicks). As sellers will only pay per click this might not be a huge problem - other than the fact that sellers will get little clicks from this promotion. A bigger problem will be click-fraud - you can bet on the fact that competing sellers in a category will simply click on the ad from their competitors to deplete their ad budget. I don’t see how eBay will effectively manage this - and given the assumption that most sellers will operate with relatively small budgets and in clearly defined categories this will become a significant challenge.
But the biggest failure lies in the very nature of this program: I can’t see many eBay sellers being too happy about the fact that eBay makes them pay triple - first they pay their listing fees, then they pay their feature fees to promote their item in the search results and then they should buy keywords? Well, well… let’s see how this will go down with the already annoyed eBay seller community.
Having said all this, the one fact which makes me wonder the most is the fact that eBay tried exactly the same thing a couple of years ago (with a partner: AdMarketplace) in the US and Germany and the program was a total failure. Only very few sellers were actually willing to cough up the money to triple pay, then they all fought with click fraud, they received very little total clicks and the conversion rate (the ratio between clicks and purchases) was despicable.
I don’t get it. Normally I don’t rant about eBay - I believe it’s a great company with a ton of fantastic and super-smart people and the whole concept still has so much room to grow. And what do they do? They take a complete failure and roll it out again - without making it better. Seriously eBay - you can do better!