Who’s Minding the Store When It Comes to Paid Ads on Online Marketplaces?

Amazon charged some online merchants for paid-ads in areas where regulations prohibited shoppers from purchasing them, according to reporting by Bloomberg. The publication exposed the problem after speaking to a merchant who said Amazon advertised his products in California even though state regulations prohibit its residents from purchasing his items.

The lack of transparency around paid ads on marketplaces and on search engines has been an issue from the beginning.

Bloomberg exposed the problem as rival marketplace eBay ramps up “cost per click” (CPC) paid ads. Regular Promoted Listing Ads (PLAs) are cost per sale – meaning sellers only pay if eBay attributes a sale to ad (recently expanding it to sales due to a “halo” effect). But with Promoted Listing Advanced ads (which are optional), eBay charges sellers any time a shopper clicks on their ad, regardless of whether the shopper makes a purchase.

eBay launched Promoted Listings Advanced ads in beta in 2021 and officially launched them last summer – as we reported last week, it’s currently running a promotion to induce sellers to try CPC paid ads.

The article in Bloomberg highlights the fact that sellers must take ad reports on faith – and until ads run and can be compared with sales (an imperfect science), there’s no way to know how effective they may be in generating sales.

On Etsy, sellers face a different but equally hairy issue – they’re charged for offsite ads only when a sale is made – but the ads are mandatory for all but the lowest-volume sellers, and worse, all of their items are subject to offsite ad fees, even on products with margins that can’t support them.

Bloomberg said Amazon apologized to the seller and “pledged to reimburse sellers for the mistake and make fixes to its lucrative advertising operation.” It’s a must-read article for any seller who advertises on a cost-per-click basis – though there may not be much they can do to gain greater transparency.

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.