America Online Inc has often been mentioned as the company most likely to buy online person-to-person auctioneer eBay Inc, and although it hasn’t quite gone that far yet, the two companies have extended previous marketing agreements by signing a wide- ranging marketing pact that will see eBay guarantee AOL payments totaling $75m over the next four years. In return, eBay will feature across all the AOL brands, both in the US and abroad as a preferred partner but the deal is not exclusive, says AOL.
The previous pact, agreed in September last year saw eBay guaranteeing AOL $12m over three years to appear to be the exclusive auctioneer in AOL’s Classifieds area. It also featured in several areas of the hobbies section of AOL for a minimum of one. In fact eBay had featured in both those sections since December 1997. That deal will fade away as this one takes over. It will be fully in place within three to four months, says eBay.
Under the new agreement, eBay will build co-branded sites that will feature select eBay content, listings and message boards. But AOL, as the dominant partner in this relationship, will retain all the advertising revenues derived from the co-branded sites. When users of AOL proprietary network type in the keyword ebay they will now be taken to the co-branded site, rather than eBay’s own. AOL also gets the right to be the exclusive third- party reseller of advertising on eBay, which means that AOL will sell all the ads on ebay.com, but neither side would say what proportion of the revenues they each keep. In addition, eBay will soon feature a download option on its site for AOL’s ICQ instant messaging service and integrate AOL’s My AOL personalized news services into its My eBay site.
The deal is obviously heavily tilted in favor of AOL, which should gain quite a bit of revenue for very little outlay or risk. But as it has 16 million members to eBay’s 2.1 million, that balance is only to be expected. รก
