New eBay-Google Deal Includes ‘Click to Call’

The WSJ (sub req’d) and NY Times (reg. req’d) are reporting this morning on a deal in which Google will distribute ads on eBay’s pages outside the US. eBay has a similar deal with Yahoo! domestically. This is something of a surprise given that eBay aggressively courted Google rivals in the US as an apparent move to counter increasing Google’s market power.

From the Journal:

Under the deal announced Monday, eBay and Google will begin testing the advertising arrangements in early 2007. The accord also calls for the companies to cooperate in developing “click to call” initiatives, which allow consumers to call merchants and advertisers directly using connections displayed in the ads.

The companies said they reached a multiyear agreement and will share advertising revenue on certain components of the deal. Other terms weren’t disclosed. EBay said the deal won’t affect its 2006 or 2007 financial results.

The power of “the market” seems to have won out, however, over eBay’s desire to not cede too much power to Google. Google’s search market share is more commanding outside the US and eBay seems to have bowed to that in the quest to generate more ad revenue.

From the NY Times:

“Google is very strong in every country outside of the United States,” said Meg Whitman, eBay’s chief executive, in an interview Sunday night. “We felt this arrangement of assets made sense.”

Outside the US — although there is Miva (the old ESpotting) — it appears that Google may have been the only choice with sufficient scale and advertiser volume. One has to see this as something of a blow to Yahoo! given the domestic partnership.

Perhaps most interesting about the deal is the “click to call” aspect. Again, from the Times:

As part of their deal, eBay and Google will build a “click to call” advertising system that will use both Skype and the much-smaller Google Talk. Ads on Google and products listed on eBay will have a click-to-call link that will allow users to have a conversation with the advertiser or product seller.

The companies expect that merchants will pay a fee — which Google and eBay will split — for each call they receive; this aspect of the deal involves both the United States and other countries.

I’m going to be investigating further but what’s most interesting to me about this is the fact that it represents a big plunge for Google into pay-per-phone call (PPCall). Without getting into the distinctions between “click to call” and PPCall, this is an advertising initiative. It’s also interesting that this is being rolled out on a large scale outside the US first for Google.

Google beta tested a “click to call” system (as a precursor to PPCall) with certain advertisers last year and then the test disappeared. In the US, Windows Live Local has integrated a “call for free” click to call capability. That’s not currently PPCall but will probably become that eventually.

Skype and Google Talk are part of the “calling infrastructure” but the idea is to connect buyers and sellers over the phone and use that as an ad vehicle, charging for each call connected. Google will apparently supply the advertisers here and eBay will take a piece of any call revenue generated.

One question is: will this relationship on calls come back to the US somehow (calls were allegedly part of the Yahoo!-eBay partnership)? And does this also mean that Google be introducing PPCall in the US market any time soon?

As I’ve said before the PPCall market would break open if Google or Yahoo! entered it in a real way.

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Here’s more detail from the Associated Press.