Reportedly, e-Commerce service provider eBay Inc. (EBAY) has replaced Google’s (GOOGL) AdWords sponsored text ads with Microsoft’s (MSFT) Bing ads on mobile devices.
eBay, like other large retail sites, like Amazon (AMZN) and Wal-Mart, runs ads at the bottom of the search results pages to further monetize its content. For a long time, the company has been serving Google ads exclusively, which have now been replaced by Bing ads. However, the traffic that has moved to Bing appears to be exclusively mobile, with desktop ads still being served through Google’s search network program.
This is indeed a much bigger win for Bing as it will continue to boost Microsoft’s traffic. During the first three quarters of 2014, the share of ad clicks produced by Bing from mobile devices increased to 36% from 25%, largely due to the addition of eBay’s mobile searches. However, Google’s mobile click share remained flat at around 38% over the same time period.
Google will be losing out on eBay’s mobile search volume as a result of this replacement. Though eBay’s mobile search ad click volume is far lesser than Google, a small percentage in paid search share could impact its top line.
Also, the competitive landscape has changed a lot in the last few years and the search giant cannot afford to miss any opportunity to maintain its lead in the search and advertising market. Its traditional competitor, Yahoo, is gearing up and Microsoft is continuously striving to gain market share. Recently, Apple Inc. also replaced Google’s search with Microsoft’s Bing as its default search engine. Facebook, on the other hand, is making all efforts to make its presence felt in the online advertising market.
eBay is firing on all cylinders to deliver sales and earnings growth. It is possible that eBay may just be testing the Bing Ads as its mobile ad provider in expectation of more attractive cost-per-click (CPCs) generated. However, the relationship between eBay and Google has been strained for years. eBay recently stated that a Google SEO penalty had cost it as much as $200 million in revenues. The huge penalty faced by eBay could be one of the reasons to replace Microsoft as its new search partner.
eBay shares currently have a Zacks Rank #3 (Hold).
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