Sunday, February 13, 2005

Ebay complains of increasing ad prices

There's a CNN/Money article about Ebay's online ad spending.
    Bill Cobb, the president of North America at eBay Inc., said the company has seen "bubble-like" price increases for the key words that drive Web search advertising popularized by Google Inc. and Yahoo Inc.

Key phrase in the article:
    Cobb said eBay will keep 2005 marketing spending in line with prior levels

If ad prices continue their upward trend, that means Ebay will reduce their level of online advertising. I suspect that ad prices are not being driven by higher ROI, but by higher traffic levels. If this assumption is true, then ad prices are dependent on the perception that traffic is valuable. The click-fraud issue makes this perception highly questionable.