Why eBay is betting on the convergence of digital media and e-commerce to futureproof its business
Two months ago eBay reorganised itself to pull together its advertising business and its shopping platform to create a new “super group” as digital advertising and e-commerce continue to grow ever closer.
EBay’s first quarter revenue growth this year was largely driven by a 17 per cent increase in marketing and advertising revenue, compares to a 1 per cent increase in its marketplace sales. And according to Nasdaq, eBay’s marketing and advertising business is expected to contribute about 21 per cent of the company’s revenues in 2016. It’s no surprise then that eBay is looking at ways it can work with retailers and brands in a more unified way that leverages the power of the business as a whole and ensure it stays ahead of the game.
The Drum caught up with eBay head of advertising, Phuong Nguyen, to find out how the company is preparing for the proliferation of online retail media, its interest in virtual reality, and how eBay is harnessing creativity and data.
What areas of online advertising are exciting you and how do you see these affecting the eBay business?
There are two areas that jump out at me. On the one hand it’s the convergence of digital media and e-commerce, where every single digital media agency is either in the process of, or thinking about, building ecommerce divisions within their businesses and it’s something that we have anticipated for so long. They are reacting to pressure from their brands where they have managed their advertising and media for so long but now they are saying, ‘help me optimise my activity across places like Google Shopping, or Amazon or eBay, and help me link that back to my media so I can see how this whole machine works’.
We hosted a round table in Cannes [Lions] about when should we expect the rise of online retail media or shopper marketing coming online at scale. We had a room full of people who have interacted with that offline shopper marketing where they say, ‘it’s so easy, it's unaccountable money, the brands spend it because they know they need to spend it’. Then I see my digital marketing teams sweating their arses off trying to make every last dollar accountable and I think surely there is a wonderful convergence of the two where they both make each other smarter and more results driven. The convergence of digital media and e-commerce is something everyone is going to be reacting to over the next couple of years.
How interested is eBay in using tools such as virtual reality and artificial intelligence?
I’d been a little bit skeptical about shop bot work with Facebook Messenger in the past because I’d not seen it in action [until last week] but to have an experience where you can jump into Messenger and talk to the shop app and say, ‘I’m going camping this weekend with my girlfriend what do you think I’ll need?’ And the artificial intelligence realises that this weekend it’s going to be cold in the UK so you need a warmer sleeping bag and it gives you options around what kind of brands or price points that you want to shop for, for me that’s proof in the pudding that this world of AI is going to start converging with something that feels a little bit more grounded and simplistic, which is predictive modelling. When we talk about AI people think about the Terminator and that machines are going to turn on us…but people are climbing over themselves to hire data scientists so that they can make this world real. It is happening now, it’s a seed of an idea but it’s very exciting.
We speak a lot about data and creativity, how is eBay utilising the power of the two?
The thing about our data is that I believe we sit on one of the biggest repositories of consumer data and the easiest way to think about how you utilise that is the intent. So we know that we observe through our data that, for example, you are interested in buying a new dress because you are going to the House Festival, therefore we should try to sell you dresses. But it’s all the serendipitous things that you can get from that data that we aren’t tapping in to as much. Clients have a very different mind-set to diving in to the data, but if we could very serendipitously predict what other things you are interested in because we saw trends in other people that had similar purchasing habits then that is when you use creativity and data to help you do something that your competition isn’t and that is where you are going to gain the greatest market share. So working with brands and media agencies to turn that into life is an area that I am spending a lot of time on.
A concrete example is when we jumped in to our data and found this really interesting segment we called ‘hairy bakers’ where we found over 400,000 men searching for baking products during the peak of the Great British Bake Off and no one ever targets those people when they are thinking about selling those products. For me that is a serendipitous insight and something really creative that you can do with data, so we did a great little campaign with Co-op Electrical where we observed the data, looked at what was happening live in the final and allowed Co-op Electrical to update their creative on the fly to be in line with what was going on the screen.