EBay Study Questions Advertising On Google

[engine]

A report by auction website eBay has found that paying for advertising in the form of keywords on search engines has little effect on sales.EBay Study Questions Advertising On Google [bbc.co.uk]

The eBay study found that most people who clicked through as a result of this service were loyal customers who would have come to the site anyway.

"Incremental revenue from paid search was far smaller than expected because existing customers would have come to eBay regardless, whether directly or through other marketing channels," said an eBay representative.

In carrying out the study, presented at an economics conference held at Stanford University, eBay removed its paid-search keywords from MSN and Yahoo platforms in the US, while retaining them on Google.

They found that without the advertising, users still clicked through as the results appeared on the search engine anyway.

"Removal of these advertisements simply raised the prominence of the eBay natural search result," read the report by Thomas Blake, Chris Nosko, and Steve Tadelis from eBay.

[netmeg]

Of course, ebay's ads were beyond pathetic, but that couldn't have had anything to do with it... oh no.

[TheRealSaxman]

@netmeg ...right! I wish they would have pulled them from Google too!

[Lenny2]

I read this article this morning... It's so full of holes. So the study is saying that everytime I want to buy a widget I automatically assume that ebay is the best place to buy it... or Amazon or some other brand? I love Amazon... i don't love them that much!

[incrediBILL]

eBays ads were stupid in the first place and in the second place eBay would prefer you do your business on eBay and not Google so there's motive to not be favorable.

Highly suspect from all perspectives.

[moTi]

because existing customers would have come to eBay regardless

then time for ebay to remove their ads from the network already. maybe some other more senseful ads instead on adsense.

[Sgt_Kickaxe]

because existing customers would have come to eBay regardless

eBay sells that pitch to their own affiliates as a reason why their quality click pricing payout "system" devalues clicks on a whim.

This article just shines a spotlight on problems at eBay and I'm not surprised they don't like adwords given some of the ads I've seen. I'm not a huge fan of Google adwords(page quality scoring system) but Google's not the problem here.

[shorebreak]

I'll withhold my opinion until I'm done reading and reflecting upon the study (on page 9 of 26...), but seems like posters here have bias of their own.

So far, the primary conclusion eBay draws is that display should get much more spend. eBay's display business is tiny while Google's is huge, so I don't think it's right to accuse eBay of ulterior motives.

More to come, but I'll say this - so far the study is reading like a solid refutation of paid search for the subset of companies that have moderate to strong brands.

[graeme_p]

The study only covered ads for sites that appear in the SERPS anyway.

I often wondered about why people do that any way. I have often searched for "company name" and got "company name" at the top of the SERPS with an ad linking to the same site above it.

The BBC article is not very good at explaining what the article is about:

Platforms such as Google and Bing offer companies the option to "buy" words. This means their websites appear more prominently if a person searches for a particular term.

[TheRealSaxman]

@graeme_p ...companies advertise branding because (in most cases I deal with) their competition will generally try and park on that company's name in order to try and take business from them. The data that most companies find says that if there are paid advertisements above the organic rankings then the majority of people are drawn to click on the highest ad which are paid advertisements. This is why it's important to rank #1 for your company's branded terms.

For example... I have a client that has a online cloth diaper store (one of the largest out there)... they didn't understand this either until they insisted that we pause all of their branded terms. We ran this test for a month just to make the client happy and the data showed that #1...they lost thousands of "paid" visitors... #2... their organic traffic didn't increase AT ALL... #3...they lost thousands of dollars in revenue that month. When we turned them back on everything the revenue returned.

Now I'll agree that if you competition isn't parking on your company's name then this doesn't make much sense, but if your wondering why companies do this... then this is why.

[RhinoFish]

MSN and Y partner with so many shady tool bars and other snake shatake, they've eroded their incremental value.

When you read about their market share, it includes a lot of inflated click data.

Eventually, this is going to bite them on the ash, hard.

[buckworks]

got "company name" at the top of the SERPS with an ad

The one saving grace here is that the CTR would be very strong which would reduce the cost per click.

I like to add the client's brand name to the negative keywords for most ad groups, then I make a dedicated campaign to focus on their brand name. For my biggest client, their average CPC for the brand name campaign is two cents.

[jadebox]

"The study only covered ads for sites that appear in the SERPS anyway."

The thing is ... the way Google is about the "quality" of keywords, ads, and landing pages, it's quite likely that any AdWords ad for a site will only appear when the site itself is in the search results. So, personally, I don't think it's cost-effective to run ads on the search network.

And, of course, eBay ranks pretty well for most searches anyway, so it's kind of no-brainer to see that they shouldn't be paying for ads in the search results. And eBay doesn't have a brand to push in the same sense as other companies.

I wouldn't claim to be typical or to have run ads enough to draw definitive conclusions from the stats, but the best ROI I've had through AdWords is from running image ads which won't appear on Google's search results pages. I see far fewer visits from them, but they are far more likely to translate into sales.

[graeme_p]

The thing is ... the way Google is about the "quality" of keywords, ads, and landing pages, it's quite likely that any AdWords ad for a site will only appear when the site itself is in the search results.

Not true for the searches I do. The advertisers sites may be buried deep somewhere, but they are certainly not on the first page.

[instand1]

add the client's brand name to the negative keywords for most ad groups, then I make a dedicated campaign to focus on their brand name.

Thank you for this, I will try it out.

[jadebox]

"Not true for the searches I do. The advertisers sites may be buried deep somewhere, but they are certainly not on the first page."

Your searches are probably not typical. The most common search phrases are probably things like "Amazon," "eBay," and "YouTube."

[netmeg]

Apparently I'm up for sale on eBay right now, but only 4 stars out of five.

Of course I bid on the company name (it also happens to be the niche name in at least one case) and I'm in PLA ads and I rank at the top of the organics. I want as much of that page as I can get. I don't care if people click on the ad or the organic, the niche is very competitive, the client has an amazing return customer rate, and all things considered, I'm getting HUGE ROI. Maybe your mileage will vary, but you won't know till you try it.

But that's another topic. My clients who let me do AdWords right have no complaints about its effectiveness, and the budgets are pretty much unlimited as long as it still works.

[RhinoFish]

Netmeg, we (my team controls the entire Internet) had to mark you down a star. We think you're 5/5, but apparently, our forever logs show you've pissed some people off over the years. :-)