eBay Report – AdWords is a waste of money

eBay Report – AdWords is a waste of money
Johor, Malaysia - Dec 9, 2013: Photo of Google website on a monitor screen. Google Inc. is an American multinational corporation specializing in Internet-related services and products, Dec 9, 2013 in Johor, Malaysia.

A recent report by eBay has claimed businesses may be wasting billions of pounds a year on paid search such as Google.

eBay claim that the report demonstrates: “branded keyword ads have no short term benefits, and that returns from all other keywords are a fraction of conventional estimates”

The report with the catchy name: “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment” went on to state that essentially, with paid advertising removed visitors would find their way to eBay anyway, thus saving them truck loads of cash.



Key Report Points:



  • Companies wasting their money targeting ads to existing customers
  • Visitors would have found their way to eBay anyway
  • Short term return on investment is negative



The report states:

“[With paid links removed] consumers simply substitute to organic search links.

That’s the problem (or the advantage?) with being a universal brand with an incredibly high level of brand recognition: Given the strength and trust in eBays brand, searchers will gravitate towards a link to eBay – after all it’s best known for it’s bargains and auction model making it a highly attractive proposition.

However, whilst eBay may not see the value in paid search advertising in general, AdWords can offer even the biggest brands opportunities that are simply not available elsewhere. Let’s take Re-Marketing for example: Graphical ads are shown to previous visitors of the site on future websites they visit to entice them back – something that proves to be an incredibly powerful tool for many advertisers.

What about Product Listing Ads? Photos of products with prices appearing within search results are highly targeted and are widely regarded as valuable.

Perhaps eBay should adapt their AdWords advertising to concentrate on areas they stand to benefit most from? Every AdWords campaign has stronger performing ad types than others and its down to AdWords Managers to hone in on the ads and ad types that deliver the best ROI.

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.”

We know that 15% of searchers click AdWords ads before organic results, so if ads contain a selection of competitive websites then potentially by not being listed you are missing out.

At the time of writing I’m unsure if eBay’s report takes product listing ads into account. It’s also worth noting eBays report is aimed at large brands and acknowledges the story may well be different for smaller business.

Also, how did eBays AdWords perform before they were such a recognisable brand? I can’t help but feel that AdWords may have contributed significantly to their brand getting to where it is now. Perhaps the value is not as great as it once was but almost certainly it has contributed to eBay’s success.



Google AdWords Provides a Safety Net




It’s worth considering given Google’s regular algorithm updates there is a degree of uncertainty in “natural” rankings, only 3 weeks ago Interflora received what the online marketing community suspected to be a ranking penalty for not adhering to Google policies, resulting in the site all but disappearing from natural search. Thousands of websites have suffered the same fate (and this includes big brands) and whilst AdWords couldn’t (and shouldn’t) replace natural search results it does allow e-tailors the opportunity to have their eggs in a second basket – and that applies to big brands too.



More than just paid search listings



Google AdWords is an incredibly powerful tool: it allows advertisers to experiment (using the AdWords experiments system) and try new methods of matching search terms in which ads are eligible to show. This provides advertisers with incredibly detailed data that allows ad campaigns to be optimised to the point the ROI is at an acceptable level. This also means areas that are not performing well can be isolated and budgets allocated to the best performing ads. More over, poor performing ads that may not be providing an acceptable ROI can be identified quickly and modified to improve – if managed correctly. Combine this with Re-Marketing and Product Listing Ads and AdWords becomes an incredibly powerful tool to attract highly relevant conversion ready visitors.

We work with small local advertisers all the way up to national brands and managed correctly, in time, can generate strong ROI. Most of our clients would never turn off their AdWords advertising – it represents a significant portion of their revenue. The truth is, AdWords puts brands small and large in front of more searchers and buyers than organic listings could alone.

It will be interesting to see how other big brands such as Amazon view the report, eBay has already stopped some paid ads, will others follow suit? Will eBay see negative long term effects of not having paid search ads? Time will tell.