Digital Journal — If imitation is the sincerest form of flattery, Google should be blushing profusely. eBay plans to mimic Google’s AdSense keyword-based ad system with its own reincarnation dubbed AdContext.
Inspired by Google’s version but not a complete ripoff, eBay’s AdContext displays links to specific eBay auctions based on words in the Web page. So a site on the World Cup would link to soccer uniforms available on eBay.
What sets this system apart from other ad services, including Yahoo’s version, is the cut that site owners can expect: Those who host ads for eBay will get a share of the product sale price, instead of a steady return for simple click-throughs. The payoff can also be quite handsome — between 40 and 70 per cent of sales, depending on volumes. Maybe this will even encourage the site owners to bid in auctions that can benefit them directly.
More importantly, AdContext — available in a few months — will revamp eBay’s business model, turning it from an online shopping mall to an e-commerce powerhouse. It’s not inconceivable to imagine eBay seeking to expand AdContext by opening the system to any advertiser and any website. Doesn’t this smell a lot like Google’s advertising cash cow?
eBay is quick to reassure insiders and investors that the program will complement rather than compete with Google’s AdSense. As any consistent Googler will realize, eBay is a close partner with the search engine and its advertising system — the auction site often appears on searches for everything that can be sold under the sun. Then again, eBay’s “We’re all friends” response could be PR spin to deflect criticism. From a tech observer’s perspective, AdContext has the look and feel of a strong Google competitor.
It seems inevitable that AdContext will trample on Google’s toes. Although the two tech companies maintain that they are allies, conflict could arise if the two ad systems begin to compete for the same advertisers. And how will consumers react to AdContext, when they are already inundated with AdSense boxes? eBay might also have to fight a public relations battle if Web surfers start to complain about all the ads clogging their tour through the Internet.
And don’t think Google is lying down and waiting for eBay to take the reigns. Google will reportedly release an online payment system in late June called Gbuy. Available free in the initial rollout, this competitor to PayPal may eventually charge merchants a two per cent transaction fee, according to Wall Street analyst Jordan Rohan.
With Gbuy, Google is returning eBay’s AdContext volley. But it remains to be seen who will serve the biggest winner.
