eBay study suggests paid advertising on Google has little effect on sales

eBay has recently revealed the results of a study it conducted into the merits of paid advertising, finding that it has little effect on sales.

The research involved removing paid advertising from search engines, from the likes of Google, Yahoo and Bing, and analysing the effect this had on sales.

eBay found that most people who clicked through the advertised links were loyal customers who would have come to their website regardless.

The study suggested that without the advertising, users clicked through using natural or organic results.

The report by eBay executives Thomas Blake, Chris Nosko, and Steve Tadelis, stated: "Removal of these advertisements simply raised the prominence of the eBay natural search result.

"Shutting paid search advertisements closed one costly path to a firm's website but diverted traffic to the next easiest path (natural search), which is free to the advertiser.”

Oren Etzioni, an online search expert at the University of Washington and co-founder of shopping service Decide.com, told Reuters that this could cause problems for Google, who last year generated £30.1 billion in advertising revenue.

He said: "Strong brands like eBay, Amazon, and others need Google less and less as they have established a loyal online following. The eBay study validates this common-sense conclusion. Even at the far smaller Decide.com, we've found that buying ads on Google was not cost effective."

eBay has not announced any plans to change the way it carries out search engine advertising following the report.

Conversely, Google said that its research suggested there was a significant increase in clicks as a result of search advertising.