By Eric Auchard
Web search leader Google Inc. will supply online auctioneer eBay Inc.
with Web search advertising outside the United States, and the two
will join forces on "click-to-call" ads that link online shoppers to
vendors, the companies said on Monday.
Paid search advertising lets marketers bid for ad space next to
keyword search results.
EBay, whose shares were up 3 percent, said that for international
online text advertising, it will rely exclusively on Google instead of
Yahoo Inc. which in May struck a parallel deal to handle eBay's
U.S. ads.
The eBay contract is part of a string of deals for Google this
month. It also plans to begin testing an ad-supported Web video
syndication system with Viacom Inc.'s MTV Networks, and it has struck
a deal to supply ads to MySpace users and other Web properties of News
Corp.
The deal with eBay "is the most important of these areas," Google
Chief Executive Eric Schmidt said in a phone interview.
"You can now see Google's strategy in each of these new markets,"
Schmidt said of MTV Web video, the MySpace community, and eBay
e-commerce partnerships. "These are very large businesses for us."
Separately, on Sunday, Google said it was moving beyond search and
advertising into the business software market, starting with a set of
Web programs for e-mail, scheduling and communications. It plans to
add additional programs later.
The eBay partnership indicates that "Google continues to grow not only
through rapid innovation, but also through partnerships with premier
online properties," Oppenheimer & Co. analyst A. Sasa Zorovic wrote in
a research note.
Financial terms for components of the deal involve revenue-sharing,
but the companies did not disclose details.
EBay said it did not expect the agreement to have a material impact on
its financial results in 2006 or 2007. Analysts said the deal was also
unlikely to have a material impact on Google during that period.
EBay increasingly depends on paid search advertising to drive bidders
to its auctions and sales. Its new pacts seek to make it easier for
buyers to search for items for sale on eBay, while being careful not
to offend sellers with competing ads.
Through its deal with Yahoo, eBay has already begun testing ads that
appear when U.S. customers fail to locate what they want on an eBay
auction search, eBay CEO Meg Whitman said.
The Google pact expands this to international sites.
If and when eBay sellers become more comfortable seeing ads alongside
their listings, eBay plans to expand the number of pages where Yahoo
or Google ads may appear, she said.
PHONING WEB CUSTOMER SERVICE
The companies said they will jointly offer "click-to-call" advertising
using the instant message and Web phone-calling services of two
companies -- eBay's globally popular Skype and Google's nascent Google
Talk service.
Click-to-call is where advertising merges into e-commerce. It allows
potential buyers to click on Web-phone ad links and talk directly to
sellers or their representatives.
The technique is seen as a promising way to reach merchants or
advertisers who may not have a Web site, or who rely on potential
customers using Yellow Pages phone directories.
"The vast majority of businesses still serve customers via the phone,"
Whitman said in a joint interview with Google's CEO. "This is the
online equivalent."
EBay has signed up more than 100 million users worldwide for its Skype
message and Web phone-calling service.
EBay said it would soon offer Skype users the option to download the
Google Toolbar, which has quick links to Google services, especially
Web search. The two will explore making Skype and Google Talk work
together for text chats and to help make users aware when users of the
other service are online.
Copyright 2006 Reuters Limited.
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Eric Auchard (reuters@telecom-digest.org)