eBay revamps its advertising model to support native sellers and brands

Online marketplace eBay is focusing on its in-house advertising business for the first time in a process that involves banning third-party product listing ads and recruiting an in-house advertising sales team.

eBay recently announced a slew of updates that will take effect on May 1, 2017. The proposed changes to its advertising business are the most significant among them. The site has always been open for third-party product listing ads — ads which redirect to sites other than eBay when clicked. And while such ads are an easy way for eBay to make money, they do pose a few problems which the company is finally addressing.

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The first, and most critical, problem is for eBay sellers who pay the site to list their products and then have to deal with competing ads for the same product being sold on other sites. The second problem is that such an advertising strategy undermines eBay's credibility in the eyes of users.

The removal of third-party ads provides more opportunity for sellers to increase their product visibility as well as reduce competition from external ad sources. It also bolsters eBay’s credibility as people browsing the site will be redirected to in-house product listings when they click on an ad.

The e-commerce company is also severing ties with advertising firm Triad Retail Media (with whom they have worked with since 2010) and is building an in-house advertising sales team.

eBay has always prioritised its core commercial operations over advertising. Now, as in-house advertising is gaining headway with Amazon leading by example, the company is envisioning a future where growth comes from partnerships with manufacturers who sell products on its site. This will also benefit large brands who are shifting from traditional brick-and-mortar to online retail and are looking to gain customers through digital advertising.

“eBay always knew that we had massive scale, but [advertising] wasn’t our core focus. But it’s actually not an adjacent business; it’s a tool kit for brands and requires investing into it,” Bridget Davies, Vice President and General Manager for eBay Advertising North America, told reporters.

The marketplace site is planning to release a product page with sponsored ad units linking to brand-specific pages, according to SearchMarketing Daily. Leveraging its 167 million monthly registered members for maximum benefit, eBay wants to integrate tools which analyse consumer behaviour and purchase history with its advertising business.

The company hopes to boost the revenue it generates through marketing services, a figure which stood at $313 million in the fourth quarter of 2016 — a four percent decline from the same quarter in the previous year.

Auctions and the sale of used products are what made eBay unique in its initial days. But the marketplace has evolved since and more retailers are selling their products directly on the site. eBay is now attempting to become a broader online marketplace for brands and the impending changes to its advertising business will serve to further that cause.