The Digital Lookout

Ebay announced yesterday that it is going to be making significant changes to its business model on September 24th.  The changes which are described by Lorri Norrington, president of eBay marketplace operations in the US, as “the most fundamental change we’ve made, ever, to the marketplace”, will include an overhaul of its site search, and will place more emphasis on fixed price listings.  There is not indication of what this increased emphasis involves but it sounds pretty drastic.  The auction system and the ability to find bargain priced item has been the foundation that eBay has been built on, and this move could effectively remove this completely dependant on the format they run with.  If the changes are drastic enough to prove the end of auction listings then does that not effectively make eBay a price comparison site?  Ok, it would be one where second hand listings appear alongside brand new item, but what else differentiates it from the likes of Kelkoo, Pricerunner and Google Product search.

This announcement worries me, as one of the key beauties of eBay in my opinion is the ability to find a bargain and outbid an opponent at the last minute!  I can see why eBay have done it as they will invariably make more money on a higher cost, fix priced listing but is this at the detriment of what has made eBay so successful to date?   Only time will tell.

I anyone needed convincing of the rise in popularity of social media and the impact it has has on the web then the recent Hitwise news letter should provide it. Bebo has just overtaken ebay in the search term share rankings and the top 10 search terms contain 5 terms relating to social media sites, with two of them being youtube. This just goes to show the prominence this sector now has in the market and the opportunity it holds for those who can adopt it to suit their objectives, whether that be through advertising or participation.

The top ten search terms (as tracked by hitwise) for the 4 weeks ending 9/6/2007 are:

1. bebo 1.14% share
2. ebay 1.11% share
3. youtube 0.52% share
4. myspace 0.37% share
5. argos 0.24% share
6. facebook 0.23% share
7. amazon 0.22% share
8. bbc 0.17% share
9. you tube 0.16% share
10. bbc weather 0.15% share

It appears ebay and google are having a bit of a lovers tiff at the moment with Ebay pulling all paid search advertising in the US on account of Google planning a party to promote Google Checkout that clashed with an Ebay live event!

Ok, so it does go a little deeper than that. Ebay are refusing to allow Google Checkout to become used as a payment method on its auction site. According to Ebay their concerns relate to “fraud, security and related concerns” but undoubtedly the underlying fact is that they want to keep Paypal as the monopoly holder for Ebay transactions. Google originally planned the party as a form of protest but have since cancelled after discussions with Ebay officials.

Ebay claim their removal of paid search listings is a mere “experiment” and a process fo assessing the most effective allocation of marketing budget and it wil be interesting what the results of this “experiement” are. With Google accounting for approx. 10% of Ebays traffic and Ebay spending a reported $26 million monthly on Adwords it will be interesting to see who needs who the most!

I have written previously about finding the best way to monetise social networking sites without annoying the users and intruding on the social elements.

Myspace founder Chris DeWolfe today hinted (below) at a possible partnerhsip with Ebay as a way to allow its users to trade between themselves. This ties in with the reason social networking is such a growing phenomenon, user interaction. As I have mentioned in the past the key to monetising social networking is to not encroach on the basic model. through genrating a marketplace between users, through ebay or otherwise, and taking a percentage for transactions myspace will be able to earn a large chunk of cash without devalueing their offering. Expect to see other schemes like this appearing soon!

MySpace founder hints at future eBay partnershipby
Charlie McCathie Brand Republic 18-Jun-07, 14:10 LONDON -

Chris DeWolfe, founder of MySpace, has revealed that the site will soon offer user-generated e-commerce transactions through partnerships with online retailers, possibly including the internet auction site eBay. The move comes after several other commercial developments, such as the addition of a classifieds section and the option to buy and sell music via the site. MySpace uses banner advertising and click-throughs to brand profiles to generate revenue, amassing £12.6m each year, and the introduction of e-commerce is likely to generate even more profit. The social networking site is trying fend off the competition from Facebook, which had its traffic grow by 89% last year, compared with 34% growth at MySpace.DeWolfe said: “We will at some point offer user generated e-commerce transactions. So if you’re on your site and you have a line of T-shirts you have designed and you want to sell them to your friends, we want to be able to provide you with the tools you need to do that.”So we could partner certainly with someone like eBay to do that. We haven’t decided yet but it would be probably a good bet that someone like eBay could be a good partner.”DeWolfe also said that another burgeoning market being considered is online video advertising. He suggested that MySpace is currently muting the idea of introducing this element to the site, as it would “definitely be a huge revenue stream”.