eBay Pull Ads and Gets Google to Back Down

It is never a good idea for a business to get a top spender upset but that appears to have happened to Google and one of its top ad clients - eBay.  Earlier today it was reported that a dispute had arisen between the two Internet titans that led eBay to remove all advertising from the Google advertising network.  While eBay people suggested this move was nothing but a normal business decision that involves testing different media options, there is underlying evidence eBay is not happy with a decision made by Google to potentially disrupt a major eBay event.

On Monday, Google announced it would throw a party in Boston on Thursday evening designed to attract eBay merchants who would be in town to attend the eBay Live annual seller conference.  The purpose of the party: protesting eBay’s decision to forbid merchants in its marketplace from using Google’s Checkout online transaction system.

Clearly this was not something that would sit well with eBay and given the limited time till the Google party the only real response available to eBay that would catch Google’s attention was to pull their ads.  While the amount eBay spends on Google ads is not known, it is safe to say it is a healthy amount and certainly big enough to get Google to reconsider.

So Google had little choice but to cancel the party and essentially apologize for their actions. 

After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference.

Because Google is growing so rapidly, it would not be surprising if the Google AdWords division (eBay is their client) even knew about plans by the Google Checkout division for a party.  If so, I wonder what the AdWords folks’ initial response was to the party idea!  There were probably a few raised voices in the room (or over email) when the idea was discussed.

It will be interesting to see if eBay reinstates their ads.  As I had discussed in another post, I find it unusual that online media sites, such as Google, allow competitors to advertise on their site since this is rarely seen in other media outlets.  Given that Google Checkout is a direct competitor to eBay’s PayPal I wonder how long Google will continue to treat eBay as an important client and how long eBay will view advertising through Google as a good business decision.