Google has been attempting to challenge eBay's PayPal product with Google Checkout, and recently tried to mount a grass-roots challenge, inviting eBay power sellers to a party during the annual eBay Live convention this week in Boston.
Google canceled the party, but eBay confirmed it has pulled the web giant's search ads, something a spokeswoman is calling a marketing experiment. While few pundits are buying that argument, we thought it might be interesting to look at the effect of such a move.
Life after Google
It's impossible to know all of eBay's internal conversion data, but a call over to Hitwise revealed eBay doesn't appear to have suffered greatly without Google -- at least initially. Traffic actually went up between June 5-12, to 1.67% of all internet visits in the U.S. from 1.59%.
There's been a slight drop-off in the share of eBay's web traffic that comes from Google. According to the data, Google accounted for 10.6% of eBay's online traffic on June 7. A week later, sans AdWords, about 9.86% of eBay's traffic came from Google, an almost 7% drop.
EBay is, of course, one of the most popular destinations on the web (fifth, according to ComScore) and the third-most-popular non-Google site people head to from the search engine, after MySpace and Wikipedia, according to Hitwise. A week ago, eBay accounted for 1.12% of the traffic flowing from Google.com; this Tuesday that dropped 8% to 1.03%.
Non-paid search drives traffic too
If that drop seems smaller than expected, consider that organic or non-paid search is still a powerful driver of traffic from Google to eBay. In fact, Hitwise data show the majority of traffic coming to eBay from Google can be attributed to people using web search for navigation purposes. The top five search terms sending traffic from Google to eBay were navigational, such as "www.ebay.com" or "ebay," and accounted for 25% of eBay's traffic from Google.
"This is a trend we're seeing across Google and other search engines," said Bill Tancer, general manager of global research at Hitwise. "The search engines are becoming a way to navigate to the sites, a replacement to the URL bar."
That doesn't mean paid search isn't important. In its 2006 Annual Report, eBay reported it spent $871 million on advertising. According to a ComScore report earlier this month, e-commerce sites are the most frequent users of search engines, and eBay is the largest, with a 4.1% share of all sponsored search links.
'One of Google's largest customers'
Citigroup analyst Mark Mahaney in a recent note said, "EBay has consistently been one of Google's largest customers, accounting for perhaps 2% of Google's gross revenue and profits in 2006."
But Mr. Tancer said, "It seems like a lot of the paid traffic may actually be in the tail of the query stream. It may still be significant to eBay, but in the end, it isn't the majority of their traffic."
In the U.S., eBay has a relationship with Yahoo that includes, among other things, PayPal icons within some Yahoo search results and Yahoo-sold advertising on eBay. Outside of the U.S., eBay has a similar ad agreement with Google.