5 Lessons You Can Learn from eBay’s AdWords Disaster

eBay has recently thrown in the towel for AdWords advertising, arguing that online ads are ineffective. In reality, eBay’s AdWords failure comes as a result of ignoring even the most basic PPC best practices. Below are lessons you can take away from a case study of eBay’s AdWords disaster.

5 Lessons: eBay Adwords Case Study

1) Use Negative Keywords

AdWords enables advertisers to set negative keywords, which tell Google what keywords you want to avoid your ad showing up for.

For example, if you are a small shop selling organic coffee beans, you probably aren’t interested in showing up for queries like “Irish coffee recipes” or any coffee-related queries that don’t relate to what you sell.

eBay’s technique has evidentially been to think of as many keywords as possible, with no regards to relevancy or buyer intent, and to set few, if any, negative keywords. While a hardy list of keywords is no problem, eBay manages over 170 million keywords, which seems to indicate an emphasis on quantity over quality.

This looks like a prime example of something that eBay should have set as a negative keyword:

case study

Irrelevant keywords can be a real danger, because those queries can result in clicks that don’t convert. They’ll cost your business money with no ROI (return on investment). While setting them is an extra step, don’t overlook the value of negative keywords.

If you aren’t setting negative keywords – you’re likely leaking money somewhere.

2) Use Dynamic Keyword Insertion with Caution

Another lesson that can be gleaned from eBay’s poor AdWords performance is to use discretion when it comes to DKI, or Dynamic Keyword Insertion. DKI enables advertisers to have a searcher’s exact query automatically inserted into your ad text. DKI can be beneficial when used intelligently, but it can be a real disaster when used indiscriminately, as eBay did.

case study[Exactly what I was looking for – NOT]

Take note AdWords advertisers: DKI is definitely not a fix-all. Use this powerful tool with discretion if you want to make it work for your business.

3) Write Original and Compelling Ad Text

For years, eBay has held steadfast to their unoriginal ad text, composed exclusively of “Shop on eBay and Save,” “Buy it Cheap on eBay,” and a few other similarly dull lines. This is a major no-no when it comes to writing ad text.

So it comes as no huge surprise that this technique hasn’t been yielding much in the form of results.

For clickable ad text that drives conversions, keywords should be split into granular ad groups. Then specific ad text should be written tailored especially to each individual ad group.

4) Measure and Track Conversions

One of the core rules of proper search engine marketing is to track your conversions ruthlessly. Measuring your campaign’s effectiveness lets you see where you’re making mistakes as well as what you are doing right and what you should continue putting into practice.

It’s very difficult to make intelligent decisions on how to best grow and improve your online advertising strategy without measuring conversions.

It’s sad that it’s taken eBay approximately 10 years to discover that their ads haven’t been working. Especially considering that it’s estimated that eBay was the second biggest ad spender in the retail & shopping industry.

case studyThis means eBay has been flushing billions of dollars down the drain for years without measuring their online ad performance. What else haven’t they been paying attention to?

The lesson here is clear: Set up conversion tracking and keep a close eye on your CPA (cost per action).

If it’s costing you more to acquire a new client via PPC (pay per click) than that client is worth to your business, then you need to optimize your campaigns or change strategy.

The last thing you want to do is throw more money at a crippled campaign. Especially if your budget is in the billions.

5) If You’re Getting Plenty of Organic Traffic, Try Remarketing

For companies like eBay that already are getting a lot of traffic from organic search, remarketing is a great option since you won’t be buying clicks on keywords you already get organic traffic from. Remarketing lets you tag users that visit your site.

For example, users that don’t complete a conversion. When they leave your site, remarketing then lets you show ads relating to whatever the user was previously looking at on your site, with the intent of getting the shopper back to your site.

Imagine a user visits your running shoes page, but then they remember they are overdue to pay a personal expense of some sort. As a result, they leave your site to go pay a bill or perform some other related personal task online instead. As this same user travels around the Web, you can have ads appear on other sites, reminding them of your running shoes and perhaps offering a 10% discount special.

The user then remembers that they wanted to purchase new shoes. They click the ad and complete their purchase.

Organic search traffic generally has a conversion rate of 2-6%, which means that 94-98% of searchers aren’t following through on their actions. Tagging those users and remarketing to them can dramatically improve your conversion rates for organic search.

Paid Search Can Work If You Avoid eBay’s Mistakes

eBay has showcased exactly what not to do with an AdWords account in this case study.

While eBay claims that paid search doesn’t yield results, it’s difficult to take their word seriously considering how many worst practices they’ve employed in their AdWords account.

Implement these lessons and tips in your AdWords campaign and see for yourself how powerful online advertising can be for you and your small business.

More in: 12 Comments ▼

Larry Kim Larry Kim founded WordStream in 2007. He serves as company CTO and is the author of 4 Award-Winning Books on Software Development. Larry also blogs at the WordStream Blog and practices photography in his spare time.

12 Reactions
  1. Great case study. It seems that negativity works positively when it comes to pulling in more business. Funny how that works. 🙂


  2. Great infographic and case study article. 160 Million keywords are just insane and someone at ebay not doing analyze data and tracking traffics, however, with that many keywords how do you manage?

    • Thanks brian. I realize there are challenges with managing large accounts but I think it’s odd that they would expand to 170M keywords before figuring out if the thing worked for them or not.

  3. Great insight into eBays fire-and-forget policy regarding Adwords. I think this highlights why any company, no matter how large or small, really needs to invest in someone with actual expertise to help run their web advertising campaigns. These tools have grown too complex and powerful to just throw a bid on some keywords and hope for the best. [Edited by Editor]

  4. What’s truly amazing is the scale at which Ebay was making these mistakes. I’m pained when I see an SMB account wasting a few hundred dollars on these types of mistakes. Ebay likely lost millions.

  5. Mark @ ThinkTraffic

    Great post Larry!

    It has often amused me just how poor eBays Adwords campaigns are/were. I guess most people have seen an iffy and completely untargetted eBay Ad at some point.

    What I always found amazing was that some of their Ads didn’t even make sense (grammatically or otherwise)

  6. Great article,

    I love to see “big dumb companies” fail to learn (remember?) what is takes to be successful.

    I’ll bet the eBay startup would be on top of this.

  7. eBay may be failing, but the real growth engine for search is going to be in small and medium sized businesses. It’s the untapped potential in that market. However for those guys its even harder to succeed (they simply don’t have access to the same tools and software that the big guys do).

    We created a product (still in beta at Addion.com) to help the little guy better understand what was working and what wasn’t in their online ads. Starting with paid search, we are now expanding to include SEO and social media. We are trying to help the small marketer out with the easy button for online advertising.

    Daunting challenge, but fact is search and online ads are still crazy hard for the mom & pop to master. You can test our beta for yourself at http://www.addion.com.

  8. “Used Diapers”…what an incredible Faux Pas.

  9. This behaviour is typical of large corporations. They have a large marketing budget and they are determine to spend all of it. Many corporate marketing departments put very little emphasis on internet marketing or the someone with seniority outside of the marketing department makes the decisions. Internet marketing requires some nurturing to gain the desire results. I’m just surprised it is eBay, a pioneer online who has ignored what made them successful, the internet.

  10. This was just plain carelessness. Someone through out a strategy and completely missed. This is exactly why I never recommend DKI (dynamic keyword insertion) because usually matches you to garbage and irrelevant traffic.

    Build large and specific accounts with full intention hard-coding every word in the account and beat competition. Winning with Adwords requires careful thought and plenty of hard work, get lazy with one of those and your investment will end up aside those used diapers.

  11. Great post Larry !

    I dont think small business owners would have this much cash to burn, to make these many mistakes. Great lessons for Digital marketers and Marketing managers who are managing their customers or organization’s campaigns

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