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Saturday, April 22, 2006

McKinsey Screws Up Ebay (EBAY)

"Few at eBay initially saw reason to fear Google, say people at the company, in part because of a 2003 study it commissioned from McKinsey & Co. McKinsey concluded that Google wouldn't use its search capabilities to break into e-commerce. That made Google a manageable threat, say people familiar with the study. EBay's dependence on Google increased as it shifted ad dollars to online ads from traditional media throughout 2004."

Oops. Great article at the WSJ (sub req) discussing how eBay is trying to stem its Google addiction. Another great quote illustrating the problem: "John Aiken, managing director at Majestic Research, an independent equity-research firm, estimates that eBay spends about twice as much on Google ads as other individual search engines, and that Google brings up to three times as much traffic to eBay as other search engines."

Twice as much for three times the traffic? Sounds like Google is still a damn good buy (advertising wise).

The consolidation is coming. I think an eBay + Yahoo! merger makes a lot of sense...

1 Comments:

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