Ebay Forms Unit to Court Brand Marketers

E-commerce powerhouse eBay has established a business unit to offer marketing and promotion opportunities to big-name brand marketers, in a bid to build on its strong e-commerce foundation and further monetize its 34 million active users.

The group, called the strategic partnerships unit, has grown out of the San Jose, Calif.-based company’s dabblings in interactive marketing and promotions over the past year. The unit apparently replaces the AOL Time Warner ad sales force, which had been representing eBay prior to April of this year. The official establishment of the unit formalizes a group that’s been working together since that representation deal expired.

“The formation… has been a natural evolution over the last year, based on the growing demand and sophisticated needs of savvy marketers who want to tap into the eBay marketplace,” said Gary Dillabough, eBay’s vice president of strategic partnerships.

With the establishment of this group, eBay appears to be trying to turn around a dismal slide in its revenues from third-party advertising and marketing. When it released second-quarter 2003 earnings in August, eBay said U.S. third-party advertising declined to $6.8 million, from $15.5 million in the same period in 2002. It went from representing 8 percent of U.S. revenues to representing just 3 percent.

The company blamed the drop on “a general deterioration in the online advertising market” and said it expected third-party advertising net revenues to continue to decrease on a percentage basis, and possibly in absolute terms. Still, eBay seems to believe that by working closely with major marketers, it can do better than the AOL Time Warner sales force. Executives said that before the strategic partnership group was formed, eBay had sold banners and buttons, but it now hoped to meet more sophisticated marketers’ higher expectations.

In recent months, eBay has forged a marketing partnership with Dr. Pepper/Seven Up, which established an online loyalty program called “liquid loot.” The e-commerce player has also been working with marketers to develop its Anything Points loyalty program, striking deals such as the one with Domino’s Pizza that sought to reach college students. More recently, the group has inked deals with companies like UPS, MBNA, Hasbro, and Universal Music Group. The newly formed strategic partnership unit is charged with continuing this momentum and exploring other ways marketers might reach customers and prospects through the online auction site.

“I think we’re only at the beginning of figuring out what brand marketers can do with eBay,” said Don Albert, senior director of business development, strategic partnerships, told this publication.

The unit will handle marketing campaigns using programs like promotional auctions, incentives and rewards, sponsorships and advertising (including search keywords), channel sales and integrated services. So far, however, the strategic partnership unit is fairly small, so it will likely be dealing with only the biggest of the big brand marketers.

One of the main strengths eBay will be pushing as it talks to advertisers and agencies is its site users’ mindset. At a time when search marketers are itching to reach people in “search mode,” it’s a pretty safe bet that folks on eBay are looking to buy (or sell) something. And, eBay execs say, its users care deeply about brands, as evidenced by search activity.

“In the top 100 searches, 70 percent are for brands or are brand-related,” said Albert, “Brands matter to them in a big way.”