The latest splash at the online giants’ pool party comes courtesy of Google and eBay. The two companies announced a multi-year deal on Monday that indicates a joint revenue-sharing enterprise in contextual and click-to-call ads in overseas markets. Financial details of the deal were not disclosed.
Although Yahoo! is currently eBay’s exclusive U.S. partner when it comes to delivering sponsored links, Google will now be the online auction giant’s sole provider of contextual ads on its online properties outside of the U.S., and will provide click-to-call ads on both eBay’s sites and Google’s properties.
This naturally gives eBay’s Skype a major outlet to expand its user base and reach. Google and eBay have agreed to implement click-to-call functionality into Skype and Google Talk.
Skype plans on offering its users the Google Toolbar with a Skype button on it that would make it simple for its users to launch the VoIP software. Interoperability between Skype and Google Talk is also planned.
Click-to-call ads are essentially links that will launch VoIP software which will connect a potential customer to the seller of a product or service. This deal would allow users to click on an ad that would launch either Skype or Google Talk, allowing them to talk directly to an eBay seller or Google advertiser.
“By working together to promote click-to-call functionality through Google Talk and Skype, we are offering advertisers another innovative way to connect with customers,” said Eric Schmidt, CEO of Google.
Though this concept is not new, it has not made a significant impact on online commerce just yet. AOL has been offering click-to-call services in its search results for over a year now. Google has been testing its click-to-call ads for about a year. Microsoft has also been testing click-to-call ads for Windows Live Local, which would enable a consumer carrying out a local search to click on a link for a specific local business, enter their phone number, and wait to receive a call back from that vendor.
This deal between Google and eBay has a number of implications, and pushing click-to-call ads into mainstream use by online consumers is not the least of them.
“It’s very significant because Google has the dominant market share, so it instantly exposes the model to a wider audience of advertisers, gives pay-per-call more credibility, and provides much more traffic volume to pay-per-call,” said principal analyst at Sterling Market Intelligence, Greg Sterling.
Click-to-call ads could balloon to be worth about $4 to $5 billion in revenue in coming years, according to Marianne Wolk at Susquehanna Financial Group.
This, of course, depends significantly on the growth of PC-based VoIP use. A recent Point-Topic report indicated that 4.7 million people worldwide paid for PC-to-phone calls in 2005, which is an encouraging sign for the potential in click-to-call ads. (This was based on an estimate derived from Skype’s Q4 2005 revenues.)
The other part of the deal involving contextual ads will be relevant when an eBay user conducts a search that does not have an adequate number of results. This is where Google’s sponsored links will kick in to help lengthen the list of results for that obscure search.
This move is a bit of a surprise for two main reasons. The first is that eBay has found the deal beneficial enough to overlook Google Checkout, which crowds eBay-owned PayPal’s elbow space and is at the very least a peripheral competitor to PayPal.
The second reason why this deal raises some eyebrows is because of eBay’s current affiliation with Yahoo!. Not only were the two companies rumored to be joining forcers to battle Google, but there were indications that Yahoo! and eBay had hoped to pursue a click-to-call venture involving Yahoo! Messenger with Voice and Skype. Both of these impending developments seem to be put on hold for the moment.
If Google proves to be an effective partner in overseas markets with click-to-call ads, and shows themselves to be the superior deliverer of contextual ads, then Yahoo! does stand to lose quite a lot. Not only will Google become the likely favorite to deliver click-to-call ads with eBay in the U.S., but it is not too unreasonable to expect that eBay would opt to drop Yahoo! in favor of Google for the delivery of text-based ads in the U.S.
Google gains another notch on its growing partnership belt, and benefits by expanding its advertising business into an arena that is still relatively new and untapped. Yahoo! and other click-to-call ad hopefuls will have to wait and see how Google fares overseas to assess just how feasible it will be to compete with the powerful search and online auction duo.
The two companies are planning on testing the two ad services early in 2007, with complete launches occurring later in that year. The specifics of proliferation of the contextual and click-to-call ads will depend largely on early results of testing, and will be “largely driven by local dynamics and joint capabilities,” according to a statement.
Sources:
http://news.com.com/eBay%2C+Google+strategic+
bedfellows/2100-1024_3-6110304.html?tag=nefd.lede
http://www.webpronews.com/insiderreports/
marketinginsider/wpn-50-20060828GoogleeBay
InkAdvertisingDeal.html
http://www.clickz.com/showPage.html?page=3623277
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