eBay Says: Hooray for Bloggers!

I really have to get a blog going. On Saturday, eBay (Nasdaq: EBAY  ) introduced a new way to make moola from waxing digital at its annual software developer conference in Las Vegas.

But by "new," I mean "really old." Here's why: eBay's service borrows heavily from Google's (Nasdaq: GOOG  ) AdSense third-party advertising system. Like Google, the auctioneer plans to allow external websites -- read: bloggers -- to post eBay ads on their websites. They'll be contextual pitches, meaning that keywords will determine the content of ad shown.

Bloggers will need to do more than just add links, however. eBay plans to publicize live auctions, which will require code to be embedded in partner sites. But that's as painful as it gets; eBay promises to share between 40% and 70% of transaction revenue from auction sales driven through affiliate sites such as blogs.

That could make AdContext, as the service is known, a very effective counterattack against rivals. Surely one is needed. Google, after all, has openly threatened eBay's e-commerce franchise with its Google Base classified advertising system. And check out this list of available auctions at its shopping directory. See eBay on there? I thought not.

But let's be honest: failing to list eBay in an auction catalog is more of a slap in the face than a real honest-to-goodness threat to the company's core franchise. I'm not so sure Google and Yahoo! (Nasdaq: YHOO  ) can view AdContext in the same light. Why? It encroaches on high-growth turf. According to a joint study by the Interactive Advertising Bureau and PricewaterhouseCoopers, U.S. Internet advertising grew 38% year over year to $3.9 billion in the first quarter. Google ate 22% of that pie while Yahoo! chomped on 16%.

Would eBay cut into either's share? Probably not, but the auctioneer could limit the growth of pay-per-click ads over time. Think about it: Click fraud remains rampant, and even digital pages have limits. Plus, enterprising bloggers will fill up only as much white space as they must in order to keep the lights on. If eBay pays them more, and more reliably ... well, anything is possible.

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Fool contributor Tim Beyers has never bought anything from eBay, but he's sold a few things. He's likely to do it again, too. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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