eBay Pulls Google AdWords Ads To Protest Google Checkout Moves

This week, eBay Live is happening in Boston, but the event is likely to be overshadowed by a fascinating and fast-developing controversy between the auction giant and Google. Rumors from ComparisonEngines.com and other sources last night and earlier today reported that eBay had pulled its ads off Google to protest a planned party (now cancelled) to promote Google Checkout, called "Let Freedom Ring," that was to coincide with eBay Live.

Google planned the party to expose eBay sellers to its PayPal competitor. Google said it was doing so because eBay was rigidly refusing to discuss providing Google Checkout as a payment option for sellers and buyers on eBay. Google said that eBay power sellers and its ProStores webhosting subsidiary had approached Google to obtain access to Checkout. According to Google, eBay wasn’t willing to talk about how to work with Checkout.

eBay officially has taken the position that Checkout is unproven, even after a year in the market. It’s fairly clear, however, that eBay is seeking to prevent competition for PayPal on its home turf. For its part, Google seemed to be seeking to tap the sometimes feisty eBay seller community to generate a groundswell of support for Checkout among power sellers. In the past, eBay sellers – and power sellers in particular – have been able to influence eBay policies, especially fee-related protests.

After eBay got wind of the Google party the company expressed its displeasure – the equivalent of "flipping the bird" — toward Google by removing its US AdWords ads. The move by eBay was confirmed by an eBay spokesperson this afternoon:

[eBay spokesperson Hani] Durzy characterized the decision to pull the U.S. Google ads as an instance in a continued experiment eBay does to determine the best allocation of its advertising and marketing budget.

Right.

No doubt there were calls between the San Jose and Mountain View headquarters of the two companies, and Google has apparently cancelled the party now in deference to eBay:

After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference.

eBay says that it’s pleased by the decision but its "experiment" will continue. eBay did not discontinue AdWords outside the US, where through a partnership, Google is the exclusive provider of ads on international eBay properties. However, last year, the Wall Street Journal reported that eBay had been actively seeking partners to oppose what it perceived as a too-powerful Google. A wide-ranging partnership with Yahoo was the outcome of that process (eBay disputes that characterization). In that deal, Yahoo is the sole provider of ads on eBay’s US site. Yahoo also recently partnered with eBay’s PayPal to have PayPal merchant promoted in Yahoo listings in the way Google promotes Google Checkout merchants.

What’s so fascinating about this is the fact that Google decided to make this guerilla end-run around the eBay corporate channels after trying unsuccessfully to persuade eBay to permit access to Checkout. Google must perceive access to eBay’s marketplace as a strategic initiative for Checkout.

Whatever Google’s motives and rationale, some will perceive this cancellation of the "Let Freedom Ring" party as Google blinking first and as an indication that the party was a miscalculation on its part. However, eBay could also be making a mistake in pulling AdWords, from which it derives huge amounts of traffic. eBay will likely see that in its analytics and traffic volumes over the next few days. I would guess that it will reinstate some or all of its US AdWords spending in the near future.

The spat is quite reminiscent of the very public squabble between Google and Viacom over YouTube. Discussion from across the web is starting and can now be found via Techmeme.

Postscript From Danny: I, for one, hope the "experiment" continues. I’m sure many are familiar with the eBay ads that have constantly appeared on Google for practically anything you search for.

For example, check out this list with ads ranging from "Dead Pets" to "Severed Heads." Or how about this Flickr photoset. Or Boing Boing noting how the apocalypse was for sale. Or how about low priced women? Or even Google being for sale on eBay.

Personally, I’d get regular emails from people who searched for my name telling me I was for sale on eBay. Fortunately being in the UK, I can still see that eBay is advertising idiots on Google (that link should make the ad appear for anyone anywhere, right now).

Postscript from Greg: I just spoke with an eBay representative who reiterated that fraud, security and related concerns were the basis of its refusal to date to allow Checkout to be used on eBay. She said that any negative experience would potentially adversely affect the user experience and related perception of eBay. I asked her, however, whether, if these fraud and security concerns were satisfactorily addressed, eBay would allow Checkout at some point in the future. She said she was unable to speculate on that at this time.

Postscript from Barry: Bill Tancer at Hitwise just posted explaining how this impacted eBay’s traffic, being that Google is eBay’s number one traffic source. He said; Google sent eBay “10.6% of its traffic for Tuesday 6/7/07. From daily clickstream, that percentage dropped to 9.86% for Tuesday 6/12/07, representing a near 7% drop from the previous Tuesday.”