eBay Joining Google, Facebook, and Amazon in Race to Become Next Major Ad Network

eBay recently announced it will follow Google, Amazon, and Facebook’s lead and allow third-party marketers to access eBay’s user data for targeted advertising outside of the eBay ecosystem (i.e. on the third-party’s website). Previously, eBay only used its data for advertising on its own sites.

This is a strong signal that eBay views itself as a major player in the lucrative advertising game. The company is positioning itself to extend beyond its role as a premier publisher and transform into a major ad network.

It’s a natural step for eBay and its competitors, and one with dollar signs written all over it. Google – the first major consumer-site-turned-ad-network – has leveraged its data to create the dominant AdSense and Display Network products. As a result, Google’s network member websites were responsible for more than 28.5% of Google’s $43 billion in ad revenues in 2012.

Facebook, certainly envious of Google’s success, announced in September that it would also start working towards delivery of ads to third-party mobile applications. Their product has not yet launched, but it will soon, and it will be robust. Google may know what you’ve searched for and the websites you’ve visited, but Facebook knows what you post about and who your friends are.

Amazon, meanwhile, also recently launched its own ad network, citing the same motivations as Google and Facebook (namely, huge revenue potential and a vast universe of data to work with). Amazon’s decision was widely praised:

“Amazon is not a retailer anymore, it is the largest behavioral marketing company in the world,” said Yaakov Kimelfeld, chief research officer at Kantar Media Compete, which helps global brands improve their online marketing. “Amazon will be the best positioned to predict whether to buy inventory or not and be the most efficient in this market.”

Can eBay Compete with the Giants?

eBay’s name might not have the cachet of Google, Facebook, and Amazon, but it is incredibly well-positioned to become a major ad network. eBay’s enormous collection of data essentially mirrors Amazon’s, but for different users. It includes user site visits, product reviews, and purchase information, all of which can span several years. This is a treasure trove for advertisers and merchants.

Stephen Howard-Sarin, eBay’s head of digital display, provided some interesting ideas for how this data could be used:

1. A truck manufacturer can target people who have purchased large items that need to be towed (like a boat) in the past 6 months.

2. A cellular network can target people who purchased a cell-phone 2-3 years ago (and who might be ready to sign up for a new plan).

3. A computer manufacturer can target people who have recently perused eBay’s computer game auctions.

Is There Any Downside?

The rewards of the ad game can be lucrative, but like all things it comes with risks. eBay’s strong customer base may feel concerned now that the site is selling years of their purchasing data to third parties. This is especially true in light of eBay’s privacy policy, which states: “We do not sell or rent your personal information to third parties for their marketing purposes without your explicit consent.” The key words, of course, being personal information, which does not include anonymized purchasing history. But the number of people who stop using eBay because of this move will likely be small, and the rewards for eBay great.

This is part of eBay’s natural progression, and may be the only thing they can do to keep up with the three Giants. If nothing else, it’s likely a decision that will pay out for years to come.

In the meantime, get ready for the next generation of ad networks — powered by companies that have been collecting information about your habits for years.