Expert Warns eBay Sellers, Don’t Blow Through Your Ad Budget

When eBay announced a new advertising program for sellers to promote their listings on the marketplace’s search listings, it sent a not-so-subtle message to sellers that paid advertising is going to be an essential element for running a successful shop on the platform.

eBay had previously offered a paid search program in the form of what it now calls Promoted Listings Standard whereby sellers can run a campaign to have their items feature prominently in search results and on product pages, and only pay a fee when someone purchases an item.

That option is still available, but the company is now rolling out eBay Promoted Listings Advanced, an alternative program whereby sellers pay on a cost-per-click basis, a model favored by other marketplaces and ad-based online services that could now become the default for search advertising on eBay.

“This obviously puts pressure on sellers to participate and downgrades the value of the current promoted listings program,” said Greg Sterling, Vice President of Insights at the location marketing platform Uberall. “At this point sellers are all but obliged to participate in paid listings on eBay.”

eBay recently announced a host of integrations for third-party ecommerce software providers that will extend access to the new search-advertising program through APIs for sellers who use those vendors, and promises that more partnerships are coming.

eBay’s move follows an industry trend that has seen large online platforms look to dial up revenues, which on the Web tends to translate into a greater push for advertising dollars.

“Increasingly marketplaces, search and social sites are more aggressively monetizing, which forces sellers to pay for placement and visibility,” Sterling said.

Already some sellers are grumbling about eBay’s new ad program, complaining that paid search dilutes the ability of sellers to compete on traditional measures of an online store like product quality, service and pricing, while eBay tries to reassure them.

Predictably, eBay emphasizes the benefits for sellers that come from paid search. Sellers who have been using the company’s Promoted Listings Standard option have typically seen double-digit increases in sales, according to Alex Kazim, eBay’s Vice President of Global Advertising and General Manager.

“From our data, we know that search plays a critical role in making a sale happen on our marketplace,” Kazim said in announcing the software integrations for Promoted Listings Advanced.

He notes that roughly 70 percent of sales on eBay start with a search query, while one in five purchases on the marketplace originate form a listing that topped the search results page.

So the incentives are there, but on eBay, as on other marketplaces, search engines and social sites, sellers should take care in designing their campaign, hewing to a realistic budget and pairing any paid ads with the normal efforts to boost their stores’ visibility. Those measures can include everything from optimizing the store and its product listings for search to simply running a quality shop with strong customer service that elicits favorable customer reviews.

“While (pay per click) or paid placement are simple concepts, it’s easy to blow through budget if campaigns aren’t carefully thought out and optimized,” Sterling said. “Some paid ads are now a necessity, but ad campaigns should be combined with organic efforts for maximum visibility and impact.”

Sterling also advises sellers to do their homework when considering a paid-search campaign. What are the marketplaces where their ideal customers are most likely to shop? What are the fees, rules and policies for advertising on a given marketplace?

“They should also check out the competition in their category on the marketplace,” he said. “Who’s advertising, who’s ranking, what are the reviews like, and so on.”

There are third-party services that offer such research, such as 2ndoffice.co. In addition, a basic, manual way to check on pricing and competition levels in a category or for a specific product is to use the Advanced Search function on eBay. Sellers can also check pricing on other marketplaces such as Etsy and Amazon to help with pricing strategy.

Kenneth Corbin

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn.