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May 25, 2006

Yahoo! & eBay in love

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Yahoo! may not have wanted to play with Microsoft, but they are in l-o-v-e with eBay. News of an eBay/ Yahoo partnership has been rapidly circulating the blogosphere this morning after a joint press release was issued announcing the two would combine forces in the areas of advertising, merchant payment, Web search, click-to-call and browser toolbars. These are all areas with a huge amount of room for growth.

What will the partnership entail? Here is a breakdown:

  • Advertising – Yahoo will be the exclusive ‘third-party provider of graphical ads’ for eBay, making them eBay’s sole advertising broker. This means no AdWords or AdCenter ads on the entire eBay site.
  • Merchant Payment – To the pleasure of many, Yahoo! Search Marketing will begin encouraging advertisers to use PayPal as their payment option. I can’t imagine they will have to push too hard. Most advertisers will surely deem this a breath of fresh air.
  • Web search – Yahoo! and eBay will collaborate to increase the quality Yahoo!’s search results for eBay.com and provide users with up-to-date eBay listings directly from its SERP to help shoppers find items related to their search.
  • Click-to-call — The companies will explore click-to-call ad technologies on their respective Web sites in the United States.
  • Branded Toolbars – Yahoo! Web search features will be integrated into the eBay toolbar, which to date has been downloaded by more than four million eBay users.

Sounds like a marriage made in heaven. Unless you’re a search engine and not Yahoo!. So why did eBay decide to partner up with Yahoo!? Why not Google or the re-emerging Microsoft?

Andy Beal hints it may have something to do with Google implementing its own payment system, Google Base. (And don’t forget Microsoft’s Live Windows Shopping!) Maybe these services were a little too similar or a little too threatening for the folks at eBay. By partnering with Yahoo! they get the number two search engine (with the most visited homepage), a far lesser threat and a better chance at maintaining a long partnership.

While Yahoo! stands to gain quite a lot on this deal, Google may find themselves losing more. The combinative powers of Yahoo! and eBay may be enough to turn them into an e-commerce superpower, causing Google to lose out on the growing social marketplace. I expect we will start to see a more fleshed out Google Base and payment system emerging in the near future. Or at least we’ll need to if Google intends to complete.

It will also be interesting to see just how integrated eBay’s listings will be in Yahoo!’s Web search. Integrating them too much may cause others to voice favoritism concerns, and I imagine eBay will want to hold on to those as much as possible for themselves. It’s kind of their bread and butter.

Microsoft, if I were you, I’d start talking to and playing nice with Amazon. They already picked you over Google once, right? Here’s your chance. Go.





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