Google Crashes a Party, AdSense Takes a Nosedive

eBay, in a startling, unforeseen move, pulled their entire advertising budget from Google’s U.S. network.  eBay ads will no longer be shown in Google’s AdSense program.  It us unknown how this will effect AdSense publisher earnings.

The removal of all eBay advertising from Google began when Google attempted to crash eBay’s user conference, in Boston, this week.  eBay is holding their annual user conference, this week, in Boston.  Google, in an effort to promote their Google Checkout program, unveiled plans for the Google Checkout Freedom Party.  The event was intended to try to convince eBay - via lobby from eBay users - to start accepting Google’s Checkout, a direct rival of eBay-owned PayPal (eBay has banned Google Checkout from their system, stating that it has yet to prove itself in fraud protection).  All attendees of eBay’s user conference were given special invitations to attend Google’s Checkout Freedom Party, for free food, free drinks, and free massages.

Google backed down at the last second, when eBay expressed serious reservations, publicly, about the Google event, and Google’s actions toward the advertising partnership.  On Wednesday Google canceled the event, only one day before it was to take place several blocks (a quick trolley ride) away from the eBay event.  Google’s blog stated that, “eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity. 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.”

Spokespersons for both companies have made a few choice comments on the issue:

Hani Durzy, an eBay spokesman, declined to say whether his company pulled advertising on Google in retaliation for the party. But he did voice disappointment in Google for the event, saying, “We didn’t think it was the way for one partner to treat another.”

Durzy decided to cast the advertising freeze as an experiment, news articles say, in an attempt to see if the money eBay has been using on Google will yield better results, elsewhere.  Neither Durzy, nor any other eBay representative, has mentioned where eBay will next advertise.

Derek Brown, an analyst for Carter Fitzgerald, stated, “We’ve seen that the two companies (eBay and Google)  have been on a collision course for a long time.  This seems to be the latest and most bizarre twist.”

eBay’s advertising funds were withdrawn from Google, this past monday, and AdSense publishers are already feeling the pinch.  Although the majority of eBay ads were relatively low cost per click (most in the two to five cent range), eBay was still Google’s biggest advertiser.  According to comScore Networks, eBay’s ads showed up on Google a whopping 188.3 million times in March.  More than double the number shown by Target, Google’s second largest (now first) advertiser.

What does this mean for AdSense sellers?  Those profiting off of eBay-related AdSense sites will find themselves in a sudden financial loss.  Publishers whose sites deal with specific products, auctions in general, and/or brand specific information, will find a good portion of the advertising on their site has disappeared.

In some cases, this may be a windfall for some publishers.  Almost every publisher would have had eBay ads on his or her website a few times a day, regardless of the theme.  Now the eBay ads that were so prevalent, and out of place, will be replaced with more highly targeted ads with potentially greater cost per click.

It will be interesting to see how this affects each individual publisher’s income.  This particular publisher has noticed a slight increase on one site, and a noticeable increase on another.  Time will tell how well publishers will fare with the loss of Google’s largest advertiser.

Technorati Tags: Google, eBay, AdSense, eBay User Conference, Google Checkout, Google Checkout Freedom Party, Target, PayPal

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