Either Microsoft or Yahoo could emerge as a partner to the online auction site in facing down the potent threat posed by Google. The stunning financial numbers released yesterday by Google probably exacerbated the distress felt in eBay’s C-level offices.
With the company looking for someone to guard its back against Google, seeing the search advertising company’s revenue and net income blow past analyst estimates brought the Google threat closer to home.
Even as eBay seeks outside partners, it’s also looking to deepen the ties it has with Google. That sounds like the old saying, “keep your friends close, and your enemies closer.” The Wall Street Journal reported how sources close to the meaningful Google-eBay chats say eBay thinks Google’s dominance in search relevance “makes it a better place to advertise.”
That love-hate relationship has eBay poring over proposals from Microsoft, Yahoo, and Google to display contextual advertising on eBay. It’s a lucrative attraction for all three companies; eBay has 130 million registered users, and eBay itself spends greatly on advertising.
Each of the three potential major Internet players bring strengths and weaknesses to the discussion:
Google:
Strength – exceptional search technology delivers relevant advertising to site visitors.
Weakness – as a company it’s solely dependent on one revenue stream, online advertising; of course, that stream was a flood of $2.25 billion in revenue for the first quarter of 2006.
Yahoo:
Strength – leadership ties to Hollywood and a highly effective ad team have enabled the company to pull in premium brand-name advertisers.
Weakness – upgrades to paid search algorithms are rolling out as a glacial pace, hampering the relevance of paid search advertising displayed to site visitors.
Microsoft:
Strength – money, and lots of it; Microsoft can afford to sweeten a deal with eBay, and the board may be hard-pressed to say no to a richer offer from Redmond.
Weakness – Microsoft is a relative newcomer to search advertising, even though the company reportedly made a billion dollars in online advertising last year; its publisher network called adCenter debuts in July 2006.
Much of eBay’s concerns have been driven by Google Base, a free service where users can list their items for sale; and by Google Payments, an alternative to PayPal that has yet to fully debut from Google.
Both Google services offer the potential to steal away eBay customers. However, eBay does have a lengthy track record with its business and PayPal is a familiar brand online with 105 million accounts.
It will take Google time to gain some traction with both Base and Payments. Google’s high brand recognition associates it with search, not e-commerce or online payments. As with all things related to technology, that could change easily online.
—
Add to document.write(“Del.icio.us”) | DiggThis | Yahoo! My Web | PreFound.com
Bookmark Murdok: 
David Utter is a staff writer for Murdok covering technology and business.
