Companies which shell out on advertising in the form of keywords on search engines are pouring their money down the drain, according to a survey by eBay, which claims they have little effect on sales.
In carrying out the study, presented at a conference at Stanford University, eBay removed its paid-search keywords from MSN and Yahoo platforms in the US, while retaining them on Google.
“Incremental revenue from paid search was far smaller than expected because existing customers would have come to eBay regardless, whether directly or through other marketing channels,” said the report.
The company found that without the advertising, users still clicked through as the results appeared on the search engine anyway.
The report authors – Thomas Blake, Chris Nosko, and Steve Tadelis from eBay – said: “Removal of these ads simply raised the prominence of the eBay natural search result. Shutting paid search ads 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.”
Even so, eBay does not plan to change the way in which it currently spends on search engine advertising.
Google said that its own research suggested there was a significant increase in clicks as a result of search advertising.
But a company spokesman added: “Since outcomes differ so much among advertisers and are influenced by many different factors, we encourage advertisers to experiment with their own campaigns.”
