Late bloomers, blue oceans and long tail sellers
Here are three important takeaways from eBay’s Q1 2021 earning call regarding Sponsored Product Ads:
One: Engage the long tail!
“In Q1, advertising growth outpaced volume driven by promoted listings, which delivered close to $224 million of revenue, up 58%. More than 1.3 million sellers promoted close to 400 million listings during the quarter.”
This is an increase of 100K (Y/Y) in the number of sellers that run SP campaigns and an increase of 90M in the number of products that are promoted and an increase of 87M (64%) in the ad revenue!
Most of the 1.3 million sellers that run SP campaigns on eBay are long tail small and medium sellers/advertisers.
When they have the opportunity, they jump on the advertising bandwagon.
Give them the opportunity!
Offer them a simple self-service Sponsored Product Ads console (with good communication and AI that generates great results) and they will come.
Two: Are you in the advertising business or in sales?
eBay is maybe the only marketplace that offers promoted listing ads on a CPA model. Sellers only pay when and if they actually sell the promoted product.
Now eBay is moving one step up the funnel and adopts the more common CPC model (sellers pay when a shopper clicks on their ad).
“The CPC model that we’re launching also give the opportunity to really kind of push volume in a different way, with a different set of capabilities, but even on single and unique items, people want to promote those items and get more exposure for them they have for the longest period of time.”
eBay is not only in the business of selling products and helping sellers sell more.
It is now also in the business of “exposure” and awareness or in other words – advertising.
In their last earning call they said:
“We see tremendous growth potential remaining as this represents approximately 1% of GMV, well below industry benchmarks. We expect advertising revenue to outpace volume for the foreseeable future.”
By moving to the CPC model eBay hopes it can break the 1% of GMV in ad revenue and reach the industry benchmark.
“It’s why we’re launching the ads feature for auction and testing that is to, is to really go after it and it’s still, it’s still not, we still have a lot of opportunity across our listings to increase the penetration, like I said before, we’re only at 1% of GMV.”
If you think of your ecommerce website as a good place for marketers to reach their potential consumer and influence their purchase decision then you understand that you are in the advertising business and the model for this business is not CPA!
“Do you want to showcase your products and get more shoppers to enter your product page? Pay for the click. If eventually they decide to buy it or not, it is not our problem. We are in the advertising business”.
In fact, there are some ecommerce websites that go even further and sell Sponsored Product Ads on a CPM model. “Do you want to showcase your products and influence shoppers? Pay for the impressions. If they click on it or not, it is not our problem.”.
In sales it’s common to pay commission on each sale. Not in advertising.
Three: Late bloomers catch up fast
eBay complains that “We’re only at 1% of GMV”
eBay and many other online retailers and marketplaces that have been offering online retail media for years aim higher. They want to reach 3%. 5%. 8% of GMV.
There are other ecommerce sites, late bloomers that have introduced their ad business only in the last year or so and would happily grab that 1% of GMV. It takes time to get there.
The good news is that the time it takes to get there is much shorter now.
The advertising agencies, the advertisers and sellers are familiar with retail media.
They know how it works.
They also know that ecommerce sites that are only now jumping on the advertising bandwagon offer bluer oceans for their ad budget. Less competition. Better ROAS!
Until several years ago you had to convince advertisers to shift budget to ecommerce.
Now you just open the door and they will be standing in line.
Mabaya offers a white-label self-service Sponsored Products Ads platform for online retailers and marketplaces that enables sellers and brands to bid in order to ensure their products are listed in premium locations in the online store.
The platform is integrated in more than 50 ecommerce sites around the globes (such as Bol.com, Jumia, Manomano, Kaufland, Hepsiburada, Falabella etc.), serving more than 60,000 advertisers and sellers.