When Ebay (EBAY) pulled all of its advertising from Google (GOOG), it took the risk of losing traffic and new customers. But, the auction site said "no", we actually did quite well. After the advertising was taken down, Ebay saw no drop in traffic.
Ebay ended up turning to TimeWarner’s (TWX) AOL, Yahoo! (YHOO) and Microsoft’s (MSFT) MSN to bring in new customers. Apparently, that worked.
Google had the hubris to plan a promotion of its online payment service, CheckOut, during a national meeting of Ebay’s competing system, PayPal. That made the folks at Ebay understandably upset.
Ebay has put some of its advertising back on Google. No one knows why, if alternatives worked so well. Maybe it was a head fake.
But, Ebay must have discovered that Yahoo!’s new Panama system was good enough to get customers, and that using it and other search services were fine replacements. Which leads to the question of whether two of Google’s natural enemies will do substantially more business together.
Yahoo! would probably give Ebay a preferred rate to get more Ebay text advertising. It would give the portal a premier customer to help market the new Panama technology. And, Ebay could avoid doing business with a rival that wants to damage its highly profitable PayPal operation.
It would be a marriage made in Hell. Yahoo! and Ebay’s stocks have been in the tank for the last year, but the vanquished make strange bedfellows.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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