For luring more retailers to its platform, eBay Inc (NASDAQ:EBAY) has found a new way. The e-commerce giant is planning a new ads scheme that will enable merchants to pay for ads only if consumers actually shop through ads source. This move comes ahead of planned separation of EBay’s PayPal division and online marketplace division.
The service criteria is simple, EBay will charge a specific amount of product’s sales price after it buyout. The higher the value sellers offer to EBay more prominent the ad will be, however product’s popularity and seller’s status also matters to EBay.
EBay is brave to launch cost-per-sale service as websites don’t consider such ads as they don’t generate revenue. The Giants like Google Inc (NASDAQ:GOOGL) advertising model is based on cost-per-click ads format, which generate revenue for Google on every click. EBay’s new service will aid smaller merchants associated with the firm, they won’t have capacity to pay before sale or have to track the effectiveness of ads, according to Alex Linde, EBay’s vice president of advertising and monetization.
“This way, there’s no upfront risk for the seller,” Linde said. “The only lever these sellers had in the past was price, and nobody wants to grow only by discounting.”
While Linde didn’t specify any revenue targets for this service instead he said that EBay will target ads to possible buyers based on its extensive data on consumers.
“It’s risky to guarantee a return on an ad,” said Lauren Fisher, an analyst at EMarketer Inc. “They could end up giving away a lot of advertising.”
The new move is a part of EBay’s plan to revive its online marketplace business which is suffering in the industry. Although EBay didn’t focused much on advertising domain in past, last year the company gained $2.76 billion in revenue from selling of ads. Most of the ads sales came from banner ads promoting brands, rather than particular products.
Promoted Listings will be introduced slowly, commencing in June EBay will provide cost-per-sales service opportunity to a few hundred sellers in the U.S., U.K., Australia and Germany. EBay also has plans to target special ads for bigger sellers’ product promotions, Linde said.
“In a marketplace the size of EBay, discovering products and sellers is a bigger problem than any search engine can solve,” Pittman said. “This way, buyers won’t have to work so hard to find things they may not even know they’re looking for.”
Pittman expected that the new cost-per-sale service will be better supportable with mobile devices, where smaller screens hinders in way of searching EBay’s database of products.
