eBay Failure: A Lesson to Technologists, Investors

by: Ashkan Karbasfrooshan posted on: June 12, 2008 | about stocks: EBAY    
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eBay (EBAY) made a wise decision to can an ill-fated and unwise auction marketplace for advertising, Ad Week reports:

Online auction house eBay has shuttered its Internet-based system for buying and selling TV and radio ads, the company has confirmed on its Web site. The system had been up and running for just over a year.

The system was controversial from the start and received little support from the cable network industry, which eBay had hoped would contribute significant amounts of inventory. But the networks by and large stayed away fearing the process would cheapen the value of their ads.

The Cabletelevision Advertising Bureau, a trade group representing the sales groups of most of the big cable networks, did not endorse the system and few of its members participated. Among the few networks that tested it were Oxygen and Ion.

Executives at eBay believed part of the problem was that the marketplace remained confused about how its cable ad system worked. While it was often referred to as an auction, it was actually an electronic RFP system where buyers could issue requests for packages of time specifying their precise needs. Sellers could respond and a negotiation would ensue, via the system, until a deal was concluded.

Let this serve as a lesson for the frigtards who think that ad agencies (media planners, creators and buyers) will eagerly give up their role as gatekeeper to a global $500B marketplace, off which they generate a 15% cut (so roughly $75B per annum).

In 2005 when I left my old gig as VP of Sales for an online publisher I thought of something similar… so I picked up the phone and called some of my contacts at agencies.  They all said this would not work… for the reason I outlined above.

This might have worked before agencies realized how big the online media space would be, now they know how big it is, how much bigger it will be and trust me they don’t want another Google (GOOG) to come in between them… especially when you consider Google’s outsized market cap relative to the Big Four agencies.

Love how eBay says the failure is a result of agencies not understanding this or that.  Really?  Maybe it’s because they understand it too well and don’t want your auction paws anywhere near their $500B ad pie.

This article has 4 comments! Add yours below...
Ashkan Karbasfrooshan

Ashkan Karbasfrooshan

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This article has 4 comments:

  •  
    auntyebay
    Jun 12 10:55 AM
    When ebay started it was a charging elephant. Meg did her best to ruin it but it was running too strong. Now that all of her stupid ideas have worn out the monster, she left. It has no where to go now but to the elephant graveyard.
  •  
    Muddling
    Investor
    Jun 12 12:19 PM
    My Website
    There is only one lesson here: if you try, sometimes you win, sometimes you lose. If you don't try, you don't win. Ad marketplace is changing rapidly now and 500B pie ad agency are currently safeguarding might evaporate much faster than newspapers' ad revenue. Google didn't make much dent on it, it just created completely new market. But somebody will.
  •  
    callies-plac
    e
    Jun 14 02:14 AM
    My Website
    Before auction snipes, before paypal,...ebay was great.

    Whitman and Cobb should have been fired right after 9/11.

    Nuff said.
  •  
    blondie
    Jun 28 06:27 AM
    Ebay is nothing more than a HUGE monopoly! They feel they have the right to dictate every move their sellers make, while trying to gain more trust from their buyers. Ebay has done the exact opposite! First, they are not your buyers, they are MY buyers. Taking away someones right to leave feedback, yet allowing the buyer to leave any type of feedback they feel is appropriate is slowly backfiring on Ebay. And if the feedback changes or the outrageous fee's don't get you, just wait, PAYPAL WILL!!! Being a Power Seller myself and selling over $16,000 a month, I found myself paying $3,000+ a month in Ebay fee's and another $7,000 a month in PAYPAL'S NEW 21 DAY HOLDS!!! To make this short and sweet, the $7,000+ that Paypal held, they can issue refunds to those buyers. I REFUSE TO SHIP MERCHANDISE THAT I HAVEN'T BEEN PAID FOR, PERIOD!! EBAY AND PAYPAL'S NEW 21 DAY HOLDS ARE NOTHING MORE THAN A SCAM!!! Basically, they say they will hold the funds for 21 days or until you receive positive feedback, BUT IF YOU SO MUCH AS BREATH WITHIN THAT 21 DAY PERIOD, GUESS WHAT?? EBAY AND PAYPAL NOW HAVE THE RIGHT TO HOLD YOUR FUNDS FOR UP TO SIX MONTHS. ISN'T THIS FUN?? When I refused to ship items that Paypal held the funds for, Ebay then suspended me. The same day, Ebay and Paypal sent emails to every customer telling them to file a dispute and request a refund. Several of my customers emailed me this email and it disgusts me! Being a Power Seller, I sold up to 100+ items week. So, now I have almost 100 sellers that have paid for items that will never be shipped to them. What is even worse, when I log in to Paypal I now see they have released some of the funds that were on hold and didn't refund the customer. Why? Paypal and Ebay now say I owe them over $11,000.00 and my response to that is "NO, NO, NO EBAY AND PAYPAL, I WOULD NEVER KEEP YOUR MONEY, I'M JUST HOLDING IT FOR 21 DAYS. THIS IS BETTER FOR YOU AND WILL HELP YOUR CUSTOMERS TO FEEL SAFE. IF YOU BREATH DURING THIS 21 DAY PERIOD, IM SORRY TO SAY I WILL HAVE TO KEEP THE FUNDS FOR UP TO SIX MONTHS OR UNTIL THE MATTER IS RESOLVED. YOU WILL SEE IN THE FUTURE THIS WORKS BETTER FOR ALL THE EBAY SELLERS AND BUYERS. How does it feel Ebay and Paypal? You will not get a dime from me, ever! If anyone knows of a class action suit that has been filed please let me know and I will be one of the first to jump on board!! No more will Ebay or Paypal take advantage of me, my customers or MY MONEY!!

    HEADS UP-
    If you have a Bank of America account, watch out because Paypal uses Bank of America. If you try to contest the charges that Ebay and Paypal will try to take from your account once you have been suspended, it will be a lot harder because BOA is PRO-EBAY and Paypal. In my opinion, they are all three scum of the earth!! You can Google Bank of America, Paypal and Ebay and you will get page after page after page of complaints! Be careful!!
    Blondie
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