EBay Returns to Google Advertising

After a spat between two of the world's largest Internet companies, online auctioneer eBay Inc. said Friday it would resume running advertising through Google Inc.

EBay pulled ads from the world's most popular search engine 10 days ago in what the auction company billed as an experiment to determine the most effective means of getting customers to visit the shopping site.

In the past week, eBay -- one of the biggest buyers using Google's AdWords marketing program -- increased advertising on Google rivals, including Yahoo Inc., IAC/InterActiveCorp.'s and Microsoft Corp.'s

EBay spokesman Hani Durzy said the experiment proved that eBay didn't need to spend as much on Google ads, which generally run to the right of Google's regular search results.

Durzy wouldn't provide dollar or percentage figures but said that eBay's pullback from AdWords in the United States would be "significant."

"Overall the takeaway for us was that we weren't as dependent on AdWords as some out there may have thought," Durzy said.

He said traffic to the site was higher during the 10-day experiment compared with the same time a year ago, and eBay sales don't appear to have been dampened.

"Other partners -- Yahoo and AOL and MSN -- really stepped up and provided a lot of value," Durzy said. "And natural search continues to drive a lot of valuable traffic to the site."

A Google spokesman would not comment on eBay's return to AdWords.

EBay executives have insisted that pulling ads off Google was in the works for months. But the move smacked of blatant retaliation, coinciding with a party that Google had been planning to siphon attention from eBay's annual user celebration in Boston last week.

Google called its event "Let Freedom Ring" -- a reference to the fact that San Jose-based eBay, which owns transaction service PayPal, does not allow rival Google Checkout as a payment method. Google canceled the gala after eBay pulled its ads and eBay CEO Meg Whitman -- considered one of Silicon Valley's most diplomatic and unflappable executives -- said she was "not pleased" with Google's plucky party.

The spat highlights the complex relationship between two of Silicon Valley's most high-profile companies, which depend on each other for traffic and revenue but increasingly compete.

PayPal, which eBay acquired in 2002, is by far the most popular online transaction service, with 143 million user accounts around the world. Google debuted Checkout only last year, though Google claims it is accepted by more than a quarter of the top 500 online retailers.

PayPal, which had $1.4 billion in revenue last year, is vital to eBay because it is growing faster than eBay's older auction and shopping business.


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