The study does draw distinctions between eBay and smaller companies who don’t have universal brand recognition, but for eBay there doesn’t appear to be as much value in paid search results as one might have previously thought. We’re always hearing rumours about eBay buying or not buying keywords, but this is the first time we’ve seen a full report on the results of their tests.
Experiments with “eBay” in the search query
The study gives the results from a series of controlled experiments where large-scale SEM (Search Engine Marketing) campaigns were randomly executed across the U.S.
“In March of 2012, eBay conducted a test to study the returns of brand keyword advertising (all queries that included the term eBay, including multi-word terms such as “ebay shoes”) by halting SEM queries on these keywords on both Yahoo! and Microsoft (MSN), while continuing to pay for these terms on Google, which we use as a control in our estimation routine. The results show that almost all of the forgone click traffic and attributed sales was immediately captured by natural search“.
In short, if eBay didn’t pay for visibility in search buyers simply clicked on natural search results instead.
Experiments without “eBay” in the search query
The next question is what about non-branded keywords, i.e. search strings that don’t contain the word “eBay”? eBay decided to turn off Google Adwords for 30% of the US and the results suggest that on average, U.S. consumers do not shop more on eBay when they are exposed to paid search ads on Google. They also discovered that the more frequently a buyer purchases on eBay the less likely they are to be influenced by Google paid search.
“Consumers who have completed at least three eBay transactions in the year before our experiment are likely to be familiar with eBay’s offerings and value proposition, and are unaffected by the presence of paid search advertising. In contrast, more new users sign up when they are exposed to these ads, and users who only purchased one or two items in the previous year increase their purchases when exposed to SEM”.
Potential impact for the UK
This is especially significant for the UK which has the most highly penetrated and engaged eBay audience in the world. On average we spend more and buy more items than any other nationality, which suggests as hardly anyone doesn’t buy on eBay it’s really not worth them targeting the UK with paid search.
Raised prominence of Natural Search Results
What’s more, eBay found strong evidence that the removal of the advertisement raises the prominence of the eBay natural search results as shown by the graphs below.
eBay conclude “Bluntly, search advertising only works if the consumer has no idea that the firm has the desired product. Large firms like eBay with powerful brands will see little benefit from paid search advertising because most consumers already know that they exist, as well as what they have to offer.
Potential impact on Google
eBay point out that $31.7 billion that was spent in the U.S. in 2011 on internet advertising, the top 10 spenders in this channel account for about $2.36 billion. Around 95% of Google’s profits come from paid search, previously Adwords and more recently the addition of Product Listing Ads. If they potentially lose $2.36 billion in one territory that’s soon going to start hurting. No surprise that Google are looking at other ways to make money.
Will eBay dump paid search?
It might be a bit late to ask if eBay will dump paid search – if you’ve looked for any search strings that include the word “eBay” lately then you may have noticed you’re not seeing any eBay paid search results. What we should have asked is “Will Amazon also dump paid search?”
You can read the full report on the National Bureau of Economic Research website.