Like Amazon, Ebay is Cutting down on its advertising business

For years, eBay’s advertising business was something of an afterthought compared to its core commerce operation — so much so that eBay had another company selling ads on its behalf. Company executives say that is all changing.

eBay is in the process of building up its own internal advertising sales team, cutting ties with the outside sales firm along the way. eBay is also eliminating product ads that link to other websites, and replacing them with advertising options that help brands drive sales directly on eBay.

The moves come as Amazon continues to ramp up its own products for advertisers, particularly when shoppers search for products on its site.

The changes are also meant to appeal to big brands that are looking for new ways to drive sales through digital advertising, as e-commerce eats up more of traditional retail sales.

eBay generated $313 million in marketing services revenue on its marketplace in the fourth quarter, a 4 percent drop from the same quarter in the prior year.

“eBay always knew that we had massive scale, but [advertising] wasn’t our core focus,” says Bridget Davies, vice president and general manager for eBay Advertising North America. “But it’s actually not an adjacent business; it’s a tool kit for brands and requires investing into it.”

In addition to product ads, eBay is introducing new ways for brands to advertise around holidays and seasonal events. The company believes it is now in a better place to attract advertising money from name brands and large retailers than it was years ago because of how its marketplace has evolved.

While the company still has a reputation in some circles as a used-goods marketplace, less than 20 percent of items sold in the fourth quarter were used. And auctions — another key part of the original eBay business — now account for just 13 percent of sales. Retailers like Toys “R” Us and Best Buy have their own official storefronts on eBay.

If you want a model for the advertising moves that Amazon and eBay are making, look to China and Alibaba’s Taobao marketplace. Taobao does not charge its sellers a listing fee or cut of sales. Rather, it makes most of its money from advertising — sellers pay for ad placements that give their products more visibility on the site.

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