Ebay Bans Arbitrage

http://www.auctionbytes.com/cab/abn/y07/m05/i17/s01

Many web-surfers go to MSN, Google and Yahoo typing strings like "ebay sign-up", "sell it on ebay", "ebay store" ..  Clever entrepreneurs were setting up rudimentary websites that lead into Ebay and then purchased traffic under those search strings via Adwords, arbitraging the cost of the clicks at Google against the revenue earned by selling the "sign up" or "lead" to Ebay's affiliate program. Ebay won't allow entrepreneurs to fix the market's inefficiencies any longer.  This is exactly the wrong way to keep long term traffic acquisition costs down?  Why?  These little arbitraging entrepreneurs were fixing an inefficiency in the market.. now that traffic will circulate back to the search engines, and potentially to other non Ebay websites.

It's beyond me why any publisher in 2007 would sell their traffic to some affiliate program (like Ebay's) in the first place. There is no guarantee, and little payout in exchange for sending the site very valuable traffic.  I would rather flush my traffic into the ether than send it to an affiliate program like Ebay's. This is the real world equivalent of working on commission.  Affiliate programs don't pay you up front, make "you" do the work converting the traffic into "sales" for them and then pay you a stipend for the privilege...  I'm surprised they don't make you stuff the boxes, ship the product and call their customers with a follow up call to see how satisfied they are.

Years ago I bought a basket of generic names which the previous owner had pointed to an Amazon affiliate program. As soon as I took over the names and set them up in a PPC program, they started making significantly more money. The next day I got a call from an Amazon affiliate manager who desperately wanted to get our traffic back.  You see, for years AMZN had been enjoying 50,000 visits (or so) a day, paying practically nothing. Now the traffic was gone and they had to buy it back on a per click basis via Yahoo (the upstream PPC partner).  So they did.

Paying publishers $25 to deliver a new sign up to eBay is not blowing anybody's hair back. Most of the free world has an Ebay account,  so signing up "new" people is quite a challenge.  If ebay was smart they would be buying targeted traffic to specific auctions on a PPC basis or join basis rather than trying to get new people to the front door.  It should be encouraging arbitrage (not dissuading it) because somebody has to do the work..  Nothing like money to incentivise that somebody.

Besides, it's disrespectful to smart, high quality publishers to see Ebay offering $25 dollars for the amazing feat of providing a "new join" in an Ebay saturated world, when Ebay is a massive backfill PPC bidder paying 100's of thousands of dollars a day to bid across bajillions of keywords at Google, Yahoo and others.

Comments

[Sahar Sarid]

That is really a smart idea they are missing, buying traffic for specific auctions. Never thought of it but now that you mention it, it's definitely gonna fit some of our projects.

[Adam Strong]

"I would rather flush my traffic into the ether than send it to an affiliate program like Ebay's"

This sounds vaguely familiar. Is this a guest post ? :)

***FS*** Ha ha .. I know what you mean.

[John]

I am surprised by this because Ebay used to actually encourage arbitrage on their site and provided instructions on how to buy traffic using your affiliate links.

Also Ebay owns shopping.com which has a PPC advertising feed, although it is not for auctions.

[Myzine.com]

That is for sure eBay should be encouraging arbitrage

Myzine.com
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[David Wrixon (aka Rubber Duck)]

Big companies instinctive don't like little companies or individuals having a slice of the action, they would sooner let their inefficient big company competitors have the business. Sounds crazy, but it is generally true.

[Jamie]

In general I agree that this is usually a viable chanel. It might be though that eBay have crunched the #'s and figured out that they can do this on a more cost effective basis than the affiliates. They do spend a boatload and know their numbers pretty well..
Or they could just be blowing it.

I do like the irony though of a company that is currently advertising on the term Placenta ("Placenta for less, Looking for Placenta? Buy direct from sellers and save") trying to restrict the marketplace.

[Salman]

Frank, I believe those arbitragers were making some good money with ebay. When you reach a certain level, the payout is something like $40 per new signup. The top guys make over 100K/month so from what I understand some people's hair was indeed being blowed back!

Curious, how many domains did it take to push 50K visitors to amazon per DAY? I wish you would give us some more insight on some of the ways you monetize your domains. You can make such a small change that effects your bottom line in a big way eh?

***FS*** 1700 names Salman.. thanks for the addtl. info

[TMfor]

How I hate those Ebay ads..."Looking for Aids ? Try Ebay"

[Lea de Groot]

Theres a service called Auctionads (URL is obvious) that is offering a % on auction wins, rather than signups.
This makes sense because, yes, surely everyone has an ebay signon by now? ;)
so, CPA rather than CPC

***FS*** Coool .. thanks for sharing.

[Dean]

I was surprise to see eBay shut out affiliates from any PPC. Although, I believe affiliates can still bid on keywords but just can directly link to eBay.