Phil Sim

Web, media, PR and… footy

How a Yahoo/eBay merger could rock Google

While I’m on the online advertising beat, a post to Site-Point claims that Amazon is planning to get into the contextual advertising game and has a beta program already running.

It makes sense for Amazon, and even more so for eBay, to track down this path. I think the gap between online advertising and the actual closing of the sale has to shrink as we move forward.

The first step towards this happening is that advertisers need to get a lot more granular with their advertisements because AdSense is not good at generating income for a very substantial proportion of Internet sites (see my previous post).

So to use the example I used previously: You do a search on President Bush. Under AdSense you get nothing. However, if you’re running an eBay contextual advertising block, suddenly your sites starts feeding up a whole host of ads for related items being sold on its auctions or at any of the thousands of individual eBay stores.

Now, that’s contextual advertising. It’s all very well to microchunk you’re content, but it doesn’t really work across the breadth of the Internet until you microchunk you’re advertising as well.

Yet neither Yahoo or MSN are coming at their advertising programs at a way which solves this problem and therefore addressing the grievances of all those content providers for whom AdSense isn’t working.
Companies like Amazon and eBay, on the other hand, who actually own catalogues of products can make an immediate impact in this space. For me, Amazon, as primarily a retailer isn’t nearly as well positioned as eBay, who exists solely as a selling platform.

Both Yahoo and Microsoft are going to struggle to compete with Google because they don’t have the advertiser critical mass. And without advertiser critical mass, pushing up rates and therefore increasing content provider’s income, the game is really difficult to turn around.

However, eBay is potentially, if it isn’t already, the biggest contextual advertiser on the Internet so it will have pretty reasonable critical mass right up front. If there isn’t an external provider to take inventory, it simply serves up one of its auctions (for which it doesn’t even need to charge for because it’s taking a cut of the sales revenue anyway)

Certainly, eBay will also realise that Google is edging onto their turf with GoogleBase so a counterattack makes even more sense. They also own Skype, so they can bring the buyer and seller even closer together via VoIP. I’ll be very, very surprised if eBay hasn’t launched its own advertising network within the next six months.

(By the way, the GoogleBase reference is worth thinking about. Google really needs to get sellers to get their product catalogues into GoogleBase and then tie that to AdSense so that they too can begin to sell at a more granular level. Arguably, this is a better approach  in the long run as its a distributed model so you don’t need to be tied to a particular selling platform like eBay. However, Google would appear to be a long, long way from making that happen, so eBay would definitely have an advantage in the short term)

Oh and one more thing. And it’s kind of a big thing. Could this issue finally be what brings a couple of the titans together. Think about a mega-merger between either Yahoo/Microsoft and eBay. In particular, I’d be bullish about a Yahoo/eBay combination. You get supply side and demand side critical mass all in one shot so that you’ve actually got something comparable to Google’s network. You get a far better suite of tools for connecting buyers and sellers – Overture/Yahoo’s SMB services/website builder/IM+Skype vs GoogleTalk. And finally you get an ability to profile your community which would leave Google for dead; ie eBay vs Froogle/Google’s Pagerank analysis vs Yahoo’s social networking profiles.

You tell me that doesn’t make a whole heap of (ad) sense?

Filed under: Google, Online Advertising

11 Responses

  1. Aayush Iyer says:

    Although the merger would seem a very good idea, it’s important to know that it will remain a join between 2 companies. All this for something that would only match the profile of 1 major company. Certainly, a Yahoo/eBay merger would drive the numbers up. But considering how everything would be a lot more seameless and focused in terms of future development, Google should be able to easily hold out it’s own.

  2. […] How a Yahoo/eBay merger could rock Google Yahoo’s just starting out in contextual advertising, but eBay has a huge advantage over Google right now: it actually has stuff to sell. Where Google’s current contextual advertising doesn’t do well in placing ads next to “President Bush” content, eBay does fine… it has plenty of geedubya memorabilia on sale at any one time. And the same applies to Amazon… there’s a huge opportunity there to close the loop between context advertising and making a sale. […]

  3. You can also try this FREE Ebay contextual Advertising Service.

    http://www.iourl.com

  4. Giovanni says:

    Sometimes the new mergers change the existing balances.

    What if now Google, for defending itself from the new business menace represented by Yahoo/eBay, will consider a new alliance with Amazon?

    In this way Google will provide the Advertising service critical mass, and Amazon will provide the items to sell.

    This new couple could be even stronger than Yahoo/eBay.

    Giovanni Busco
    http://bloggingleads.blogspot.com

  5. That technology would be that hard. Talented Amazon Developers certainly can do this…
    I don’t thinkg Google will team up with Amazon. The only thing
    they need to worry about is click fraud and competition from Microsoft, Amazon and ask.com …etc) All their contextual Ads effort will cut google’s revenue…

  6. I saw Charlie Rose interview the head of Yahoo the other day. He sure sounded like he was open to aquiring (in general). Though he didn’t mention eBay specifically, he talked about joint ventures and working together with other companies that had synergy with Yahoo.

  7. Ian says:

    Google will jusy BUY Amazon and Ebay……and possibly Yahoo as well. They certainly have the cash to do it.

  8. Paul says:

    Very interesting ideas, you obviously do your research. I found your insites very useful and will probably try some things you have written about out myself. Keep up the sterling effort, i will definately be keeping up with your site. Paul

  9. Refi says:

    Refi

    sparser Iliad butterfat Egan awed endorsement.

  10. One of the quickest ways to make money online is by using eBay. As you know, eBay is a huge auction site and gets millions of visitors per day.

  11. […] How a Yahoo/eBay merger could rock Google Yahoo’s just starting out in contextual advertising, but eBay has a huge advantage over Google right now: it actually has stuff to sell. Where Google’s current contextual advertising doesn’t do well in placing ads next to “President Bush” content, eBay does fine… it has plenty of geedubya memorabilia on sale at any one time. And the same applies to Amazon… there’s a huge opportunity there to close the loop between context advertising and making a sale. […]

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