- EBay is taking aim at Amazon's giant and growing ad business.
- The company is bringing its ad business in-house, has hired specialists, and has brought on a seasoned sales exec from Time and Yahoo.
- EBay's pitch is that it's easier to work with and more generous with data than Amazon is.
- But it has low awareness and a downmarket image with some advertisers.
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Amazon is becoming an advertising behemoth — and eBay is coming for its share.
EBay started taking its ad business more seriously in 2017, when it stopped outsourcing its ad sales function to make a bigger push for what it considers complementary advertisers like financial services, auto, and telecom — those that don't sell products on the site. So eBay can, say, find visitors who were in the market for a car and help an insurance company target them for auto coverage.
EBay has since grown its own sales team and assigned people to specific categories. It's created an account management team and a client strategy and insights team to better cater to big advertisers. Finally, it hired Scott Kelliher, a vet of publishers like Time and Yahoo, as its first head of brand advertising and partnerships, in May.
Amazon may be a giant in e-commerce and increasingly, advertising, but it has its weak points. It's been steadily building up its own lines of products like household goods, directly competing with the advertisers and sellers that use its platform. It's those points that eBay is trying to leverage.
EBay is trying to exploit Amazon's weaknesses
Ebay's pitch is that it's big and has tons of data on what kinds of products people buy and their path to purchase — without the conflict of interest or data-sharing problem that many advertisers frequently criticize Amazon for.
Another frequent advertiser complaint is that the Amazon's ad business is sprawling and fragmented, making it hard to run a big, coordinated ad campaign on the platform. EBay, meanwhile, is more than willing to bring all the parts of its ad offering together for advertisers.
"There are very few places that are as big as we are," Kelliher told Business Insider. "Our data and place we sit in the e-commerce advertising system is unique. We're the only one that doesn't own any inventory." While other sites are "unwilling" to give advertisers the data they want, he said, "We're happy to share."
Chris Merrill, SVP & CMO of direct to consumer at Synchrony, an internet savings bank, said the bank started testing advertising on eBay in 2018 and has increased its use of eBay since to grow awareness of the bank and drive people to its website because eBay can help Synchrony reach people it can't reach elsewhere.
"They have a lot of data and they know how to use the data," he said.
Other retailers are getting into advertising, too
To be sure, eBay has an opportunity, but it faces challenges, too. EBay has 6.6% of US e-commerce, though that's dwarfed by Amazon, which has about half the market. EBay is on track to do $700 million in advertising this year, a sliver of Amazon's $11 billion-plus projected ad business.
Advertisers are spending more with online retailers as they divert shopper budgets from physical retail stores and traditional media companies to places where they know people are already in a shopping mindset and the retailers have rich data on them.
But that also means eBay has to contend with grocery giants like Kroger, Walmart, and Target that are getting into advertising as their retail businesses struggle to compete with Amazon.
EBay has to do more to let advertisers know it's open for business and also convince them it's a good place for brand-building, not just driving a sale. It doesn't have video ad formats, which advertisers have come to expect. Plus, its overseas reach is limited compared to Amazon.
Kelliher said eBay does have global ad sellers, but acknowledged eBay has work to do.
"It's a lot of awareness — what we're capable of, making advertisers understand what's unique about us," he said.
EBay has a 'bargain-basement' problem
But eBay's problem goes beyond awareness. Mudi Jaju, global head of ecommerce at the agency Wavemaker, gave eBay credit for being easier to work with than Amazon and for being proactive about offering up data to advertisers.
But he also pointed out that eBay's discount image and presence of counterfeits sold on the site hurts it with certain advertisers. (EBay's heard this before; its response is that 80% of items sold on eBay are new and 90% of items are sold at a fixed price, not auction.)
"If you're a fashion brand, eBay does have a bargain-basement twinge," Jaju said. "That holds up a lot of brand spend. The other issue is, if you're at the brand outlet section, of the six links I looked at, half of them were broken. I'm rooting for eBay because I desperately want someone to challenge Amazon. I put multiple proposals to clients, but there's a perception problem. At Amazon, it's operationalized. It's archaic and slightly bonkers, but it works."