I’ve had quite a few people asking me for my opinion on eBay announcing it’s intention to enter the contextual text link market.
here are the basics of it as reported this week by Reuters…
“The world’s largest e-commerce site said it plans to provide hundreds of thousands of eBay auctioneers with simple snippets of code they can embed on other Web sites that showcase items that are for sale on eBay’s site.
A test of the program, dubbed eBay AdContext, is set to be introduced early next week, Swaaij said. What goods appear in any particular advertisement will be determined by the keywords on that Web page, a technique known as contextual advertising.
EBay’s system scans the text of a Web site for keywords and returns links to relevant eBay sales listings to the Web page. A Web site about sports could automatically feature links to sporting gear or memorabilia available on eBay, for example.”
I’ve held off giving my opinion because I’m yet to see it in action but as I’m being asked about it so much thought I’d give a few initial comments from what I’ve read about it.
The ads are apparently going to run as text, image and flash ads (publishers choose which they want to run).
My initial reaction when I heard about eBay’s AdContext was two fold:
- On the one hand I was quite happy and intrigued. My feeling is that having more options for publishers to run ads is a good thing as each site is very different the more types of ads to experiment with the higher the chances of finding one that will suit a particular blog or site.
- 2. On the other hand I was dubious as to the success of yet another contextual ad network. The problem that will face eBay with their ads is that most publishers looking to run ads on a site will already have contextual advertising on their sites (AdSense or YPN mainly) and that both of these programs do not allow any other contextual advertising to be shown on the same pages.
I’m confused about the reports that eBay doesn’t see their AdContext ads as competing with AdSense or YPN – some reports are saying that they see them as complimentary and that they’ll run on the same sites together – but as I read the rules of AdSense I don’t see how they could be allowed.
Other contextual ad systems have launched in the last 12 months but in most cases they have either failed to catch on or have changed their ads to be non contextual (for example Chitika’s eMiniMalls switched their default mode to be non contextual).
So eBay will, in my opinion, have an uphill battle to covert publishers to AdContext because to do so will probably mean they need to give up their current advertising.
One incentive to get publishers to switch would of course be if AdContext coverts very well – but once again I’m unsure how well they will convert.
The article I linked to above says – ‘Web site affiliates receive a cut of 35 percent to 60 percent of sales, depending on volumes.’
When I first heard this I was quite interested – up to 60% of the ‘sale’ in an auction sounds quite good if the auction goes for a high price but then I started to do the maths. The thing about auctions is that there is only ever one winner or one sale. The amount of bidders on an item might be reasonably high but the likelihood of an ad click producing the one and only sale in an auction can’t be particularly high can it?
Of course publishers don’t get 35-60% of the sale price (what person holding an auction would be willing to pay that much!) – instead its’ a percentage of eBay’s revenue from the auction. eBay earns 6.5% of the auction value – which means as an affiliate you earn between 2.27% and 3.9% of the auction sale price – if the person you refer actually wins an auction (up to 7 days after you refer them if the conditions are the same as their regular affiliate program).
I’m not saying that it’d be impossible to do well out of these ads – but I wonder whether the average blogger will do better out of them or other forms of contextual advertising. I can definitely see eBay AdContext ads working well on site’s that follow auctions but wonder how many bloggers are going to make much off them.
Of course it’s too early to make judgments on an ad system that is yet to launch – but I’m pretty skeptical at this early stage and while I welcome new ad systems into the space wonder whether eBay might need to adapt it’s ad system to get the attention of publishers.