Google, eBay Form Advertising Alliance
Monday, August 28, 2006; 6:16 PM
SAN FRANCISCO -- If you're in the market for a nanny or a plumber close to home, chances are you'll consult the Yellow Pages or ask friends for recommendations. You might even check community sites like Craigslist or Angie's List, but Google Inc. and eBay Inc. would rather you use them.
The two prominent Internet companies announced an advertising partnership Monday that aims to put buyers in touch with a wider variety of sellers, such as the neighborhood exterminator, math tutor or roofer.
Under the arrangement, Google would provide search results whenever an eBay member typed in a search term that failed to find any matches on eBay's vast auction site.
Although eBay lists millions of physical, shippable goods, such as antique airplanes and used cloth diapers, the company has long struggled to sign up service providers _ people who sell their labor or intellect, not their physical wares.
Nearly two years ago, eBay purchased a 25 percent stake in Craigslist to study how the world's most popular online auction company could learn from the bare-bones community site, which has a thriving services category and sellers ranging from professional escorts to freelance software engineers.
But eBay hasn't been able to attract similar numbers of professionals to its site. For example, eBay contains more than 6,500 items related to scuba diving. But a search Monday for "scuba diving lessons" resulted in zero matches.
The new deal would change that. Instead of nothing, eBay visitors would get text advertisements from Google. Although eBay risks sending visitors elsewhere, it ensures consumers that by going to eBay for nearly anything, they'd find a seller somewhere.
Financial terms of the deal were not released, but both companies acknowledge that it includes revenue sharing, so eBay would also likely get a fee for referring people to other sites.
The service, which will be rolled out in early 2007 to consumers outside of the United States, is similar to a partnership eBay has with Yahoo to provide listings domestically. The companies haven't disclosed many details of how they'll localize the search results, but that's technologically straightforward _ particularly with eBay, which asks users to register with an address.
"I could see the local hardware stores, or maybe caterers, noticing something like this," said David M. Garrity, director of research for Dinosaur Securities. "Finally the Internet would work for them."
Until recently, few locally owned, small-scale businesses such as the corner bakery or snow plower bothered creating Web sites. They relied on word-of-mouth advertising, the weekly church bulletin or hand-scrawled flier stapled to the library cork board.
But e-commerce companies such as eBay and Amazon.com Inc. have made it relatively affordable for merchants to build custom Web sites, while search engines let them target people who are interested in a highly specialized product.
The deal could make it easier for local merchants to compete against "category killers" such as Home Depot Inc., Lowe's Cos. and other dominant retailers. Eventually, eBay users could rank local merchants as part of its popular feedback system.
"It may turn out that the small companies are more responsive than the big companies. They get great reviews and rise to the top," said Roger L. Kay, president of research firm Endpoint Technologies Associates Inc. "For consumers and merchants, it's unmitigated good."
The deal seeks to exploit technology known as Voice over Internet Protocol, which allows people to conduct real-time voice conversations online. A visitor might be able to click on a link to connect directly with a service representative. VoIP is expected to be a boon for entrepreneurs whose customers want more contact than an e-mail or instant message _ people trying to find the perfect wedding planner or eldercare nurse specializing in diabetes.
As part of the new deal, eBay and Google will join forces to roll out new "click-to-call" advertising across Google and eBay sites in the United States and abroad. Online shoppers would click on an ad to place a direct voice call to an advertiser or eBay seller, using Google's Talk software or eBay's Skype, which eBay purchased in October for about $2.1 billion.
Business experts say such deals will greatly improve e-commerce _ and force more print advertisers online.
Ten years ago, executives restructured the Yellow Pages so that it essentially became a print extension of SuperPages.com, now a subsidiary of Verizon Communications Inc.
The division produces 1,218 directory titles in the United States and has an online registry of 17 million business listings. SuperPages.com already partners with eBay and Google and has click-to-call and other advanced features.
"We wrote the playbook on getting small businesses to advertise online," said SuperPages.com spokeswoman Mary De La Garza.
It's unclear whether sellers will embrace the eBay-Google deal.
Rosalinda Baldwin, chief executive of The Auction Guild and editor of a newsletter for eBay merchants, said the deal implies a level of Internet savvy that collectors of teddy bears and Pez dispensers _ the stereotypical backbone of eBay's selling community _ may lack. The click-to-call feature may also prove annoying.
"If eBay itself does not want to hire personnel to take sellers' phone calls, why would a small business owner want to handle phone calls?" Baldwin said.
Shares of Google rose $7.69, or 2.1 percent, to close at $380.95 Monday on the Nasdaq Stock Market, while eBay shares rose 49 cents, or 1.9 percent, to finish at $25.79.