OH MY there's a bit of a tiff erupting between the big online players, as EBay Inc one of the largest online marketplaces just released a study that questions value of Google's main ad service. Established brands such as eBay, Amazon et al don't get more customers from paid search results than they otherwise would have. They have an online following that they already sell to, and online marketing channels doesn't bring in new customers, just the one who would have searched eBay anyway.
"The conclusion: 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," eBay spokeswoman Johnna Hoff wrote in an email to Reuters on Tuesday.
The study highlights a potential problem for Google, which generated $46 billion in ad revenue last year, up from $38 billion in 2011.
Some leading e-commerce companies, such as eBay and Amazon.com Inc, that have traditionally been big buyers of Google paid search ads may not need the service as much anymore.
"This has to be a major concern for Google," said Oren Etzioni, an online search expert at the University of Washington and co-founder of shopping search service Decide.com.
"Strong brands like eBay, Amazon, and others need Google less and less as they have established a loyal online following," he added. "The eBay study validates this common-sense conclusion. Even at the far smaller Decide.com, we've found that buying ads on Google was not cost effective."
Buy ads on google is not cost effective? Really now? Did eBay Just Prove That Paid Search Ads Don't Work? to borrow Rob Fisherman's succinct headline in the Harvard Business review Blog. TL;DR - kinda. It'll work for some smaller brands, in smaller markets. It'll work when targeted correctly.
The larger lesson from eBay's experiment is about the importance of questioning conventional marketing wisdom. As much as the internet has given companies opportunities to target their ads, it's also given them a ready testing ground to experiment with different business practices to see what really works.
Still, as the worlds largest advertising agency moves from ads to tech (Glass anyone? No, how about a talking shoe or a Chromebook?), we're beginning to wonder if Google is going to grow into the worlds largest in house ad agency & production company and R&D department, whilst simultaneously building the future Amazons, Entertainment channels (*coff*Youtube*coff*) and eBays of the world... Hold me, I'm scared. (PS Hire me Google, I give. You win.)
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