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March 14, 2013

eBay study casts doubts on Google’s ad worth

A study by online auction site eBay found the return for the money spent on advertising on search engines were 'minimal'.

By CBR Staff Writer

Google, which generated $46bn in ad revenue in 2012, sells firms keywords making the advertisers page appear more prominently in its searches.

eBay’s study claims the consumers who chose to click on the particular ads are loyal customers or who otherwise would have already been informed about a firm’s product, so the benefits of paying were therefore ‘minimal’.

The work found shutting paid search advertisements closed one, quite costly, path to a firm’s website but diverted traffic to the next easiest path, that of a natural search which is free to the advertiser.

The study found that Google searches for the keywords AT&T, Macy, Safeway, Ford and Amazon resulted in paid ads at the top of the search results page directly above natural (also known as organic) unpaid links to the companies’ sites.

The study was conducted by Thomas Blake, Chris Nosko, and Steve Tadelis from eBay, who said deletion of these advertisements magnified the prominence of the eBay natural search result.

eBay spokeswoman Johnna Hoff was quoted by Reuters as saying: "Incremental revenue from paid search was far smaller than expected because existing customers would have come to eBay regardless, whether directly or through other marketing channels."

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