Monday, June 25, 2007

Google Loses Some Business From eBay But The Stock Goes Up!

We heard some pretty large numbers coming out of the Google/eBay spat. eBay was reported to be spending $8 million a week on AdWords so you would think Google lost around $11.5 million over the 10 days eBay was off the site but the truth is, many other advertisers actually came in to fill the void left by eBay. I do believe there was less revenue but I can't see how it was $11.5 million.

While eBay was the largest AdWords advertiser they were still only 2% of Googles business and it is clear the pain was only momentary. Investors had bid down the price of Google stock to $505 per share on the 14th of June, 1 day after eBay pulled their ads and the stock closed today at 528.90 in after hours trading. It doesn't look like investors were worried about the little tiff between the two companies.

I certainly believe Google shouldn't have backed down by canceling the party. Once you open the door you have to walk through it. Even if they didn't lose $11.5 million that was still one very expensive non-party. Besides if you listen to eBay, they were going to pull all of their ads as a test anyway.

From what I am hearing Google used to provide eBay with 15% of its traffic so I'm guessing that's really why eBay didn't pull their ads off of the site permanently.

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