Google’s in no mood to party after eBay cancels ads
Google’s attempt to tweak eBay by holding a party in Boston aimed at attendees of the annual eBay Live! event this week backfired when eBay responded by canceling all its Google AdWords ads in the U.S. While Google quickly canceled the party, the growing tension between the two Internet heavyweights is hardly going away—and could benefit Internet retailers who are being wooed by both sides.
The spat began Monday when Alyssa England of the Google Checkout team posted an invitation on a Google blog site to eBay Live! attendees to attend “a celebration of user choice” tonight at Boston’s Old South Meeting House where American colonists launched the Boston Tea Party in 1773, one of the protest actions that led to the American Revolution.
While Google Checkout was not mentioned in the posting, it was understood that “user choice” was a reference to eBay not allowing consumers to pay with the Google Checkout payment service. EBay says it does not accept Google Checkout because the service was only introduced last year and has not proven its reliability. There is, however, widespread suspicion that eBay sees Google Checkout as a competitor to the payment services of its PayPal subsidiary.
Soon after Google posted its invitation, eBay responded by canceling all its U.S. ads on Google AdWords. EBay characterized the move as one of its periodic experiments in how it allocates marketing dollars, but the move was widely seen as related to the Google party.
“The timing was suspicious,” says Scot Wingo, president and CEO of ChannelAdvisor, a marketing firm that works with eBay sellers and other online merchants. “While it’s true they’ve done experiments in the past, they’ve never done a 100% experiment. It’s been plus or minus 10%, never minus 100%.”
Google then canceled its party. “EBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity,” wrote Tom Oliveri of the Google Checkout team in a blog posting Wednesday. “After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference.”
The ad cancelation could have a measurable effect on Google as eBay was the largest buyer of paid search ads in March, with 188 million sponsored link exposures, according to comScore Inc., a firm that tracks web traffic. But Wingo expects eBay will resume advertising in about a week, allowing enough time to lend some credence to eBay’s claim to be conducting a marketing test.
Meanwhile, retailers that sell on eBay are concerned, says Wingo who is attending and speaking at the Boston event. “They feel they’re caught in the middle of this,” he says. “There’s probably going to be an appreciable effect on traffic because eBay is not advertising, and they’re concerned about the impact on their businesses.”
However, Wingo adds that the competition between eBay’s PayPal and Google Checkout could also benefit online retailers. “As those guys duke it out for the hearts of merchants, trying to get them to take their payment mechanisms, it’s created a lot of economic incentives which are good for merchants,” he says.
Wingo notes that Google is offering merchants essentially free payment processing through this year when consumers pay through Google Checkout, giving retailers credits for paid search ads equal to the processing fees. Merchants that accept Google Checkout also get a Google shopping cart icon added to their paid search ads, and Wingo says that is boosting click-through rates on those ads by at least 10%.
PayPal last month announced a program of technical and marketing support and financial incentives for banks and technology providers that sign up merchants to accept PayPal Express Checkout, a payment service similar to Google Checkout.
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