As the battle to become the next Microsoft heats up, this week I’ve been struck by the online maneuvering from both eBay and Google. The auction company is looking to tread on Google toes with its own contextual advertising service, named using devilish cunning ‘AdContext.’ Google, meanwhile, is keeping very schtum about the imminent launch of a PayPal-alike online transactional service called either GBuy or Google Checkout depending upon which source you believe. What seems clearer cut is that the service will go live before the end of the month.
Neither strategy should come as any great surprise, to be honest. Currently eBay is amongst the biggest spending advertisers on Google, so it makes sense to look at ways of reeling in some of that expenditure. Especially so considering the possible expansion of services such as which is undoubtedly perceived as stepping into eBay territory.
The contextual advertising service isn’t intended as a generic advertising network, and won’t follow the usual PPC or CPM model either. Instead, it’s very much a ‘monetization’ stream for website operators (in particular blogs) and a method for driving more auction business for eBay. In essence AdContext would promote current auction items, based upon the context of the page in question, with the site operator getting a percentage of any resulting sale. That percentage is a closely guarded secret at the moment, but expect it to be in the region of 20%. The fact that eBay is officially the world’s largest ecommerce site will not, I suspect, have the mighty Google worried about the possible impact upon its own ad based revenue even if it does lose some eBay business. Not unless the strategy changes and eBay starts lusting after a cut of the general online advertising network market that is. However, the Google GBuy service is another matter entirely.
Now this does seem to have the online retail transactional market players worried, and with good reason. The increasing popularity of services such as Google Base and Froogle, coupled with the prospect of vendors being able to get ‘trusted GBuy merchant’ accreditation, and the overall exposure Google is able to give the total package has serious competition written all over it. Google stands to make money from the transactional charges (estimated to be in the 1.5% to 2.5% region once the ‘free’ trial period is completed), and possibly gain valuable profiling data to help with both targeting and costing of ads. But even that doesn’t get to the real heart of this particular strategy: I suspect that what Google is looking at here is a move not into eBay/PayPal territory per se, but rather the Microsoft ‘ one. An all-in-one, one-stop-shop, system where users can buy securely from multiple vendors and also participate in multiple vendor services with just a single sign in to that Google account, makes perfect sense in an increasingly web application driven online world.
Watch this space, as they say. I have a funny feeling it’s going to be a very hot summer in the world of ecommerce.
