Few businesses demonstrated the unique benefits of the internet to newcomers as thoroughly as eBay, a highly profitable combination of peer-to-peer shopping network and traditional auction house which matches buyers and sellers in more than 40 countries around the globe. Anything legal can be bought and sold on eBay, from low-priced mainstream consumer products to the most obscure collectors' items or even the totally bizarre. Gross value of goods sold during 2014 was almost $83bn, and the community includes more than 155m active users worldwide. Its impressive profit margins have made eBay one of the world's most valuable internet businesses. One of the company's comparatively few missteps was its high-priced acquisition of VoIP pioneer Skype. Having failed to establish any meaningful synergies with its online auction business, eBay sold on a controlling stake in Skype that was later snapped up by Microsoft. Online payments service Paypal proved a more lucrative venture, contributing close to half of group revenues by the time it was spun off as a separate company in 2015. The biggest challenge facing eBay now is how to reignite growth in the face of multiple rival shopping services and a slowdown in traditional classified selling.
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Adbrands Weekly Update 5th Nov 2015: In the wake of its recent spin-off of PayPal, eBay took the opportunity to divest its CRM and web development arm eBay Enterprise, selling that division to a consortium of private equity funds including Banneker Partners and Permira. The deal completed this week with a price tag of $925m. The business was created from eBay's 2011 acquisition of independent company GSI Commerce, which assisted third party retailers with the creation and management of their online sales operations. Following its sale this week, the CRM operations of eBay Enterprise were themselves sold on to digital agency Zeta Interactive. Most of the remainder of the company will continue to trade as eBay Marketing Solutions, although it is entirely separate. It has negotiated a license to continue using the eBay brand.
Adbrands Weekly Update 24th Sep 2015: Ads of the Week: "Shop A Song: Tik Tok". Goodby Silverstein has an immensely entertaining campaign out for eBay, in which various songs are illustrated by way of the multitude of objects to be found on that extraordinarily diverse ecommerce site. Here's Ke$ha's Tik Tok. Some very witty juxtapositions of lyric and object, though you may need several replays to work them all out. Someone had a lot of fun planning the sequence of edits. More spots over on our Facebook page.
Adbrands Weekly Update 2nd July 2015: PayPal set about strengthening its position ahead of its spin-off from eBay, expected before the end of this month. It agreed to acquire money transfer competitor Xoom for $892m. Though it's headquartered in San Francisco, Xoom has a strong presence in developing markets such as Mexico, India, the Philippines and China, whereas PayPal is mainly concentrated at present on the US and the UK. Xoom will continue to operate as a separate brand, run by current CEO John Kunze. It reported revenues of $159m, on transaction volumes of around $7bn.
Adbrands Weekly Update 16th Oct 2014: Ads of the Week: "Shop The World". A second consecutive appearance among Ads of the Week for Goodby Silverstein with their fun-packed new global campaign for eBay. You won't find many other ads in which Godzilla rubs shoulders with Jimi Hendrix, at least not this week. It would be even cooler if you could use your smartphone to snap a pic of that thing you saw in a movie or an ad or on the street and then search for it automatically on eBay. Coming soon no doubt... since Amazon already does that with its new wand.
Adbrands Weekly Update 2nd Oct 2014: Ecommerce giant eBay announced plans to proceed with the spin-off of its payments division Paypal, most probably in the second half of 2015. That marked a complete reversal of the group's previous stance when it strongly resisted calls earlier this year from activist investor Carl Icahn to separate the two businesses. Group CEO John Donahoe will step down following the separation, and will be succeeded at the slimmed-down eBay Inc by Devin Wenig, current president of global marketplaces. Paypal accounted for more than 40% of eBay's revenues in 2013, $6.6bn out of a total $16.05bn, and around a third of divisional operating profits. "For more than a decade eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value," said Donahoe. "However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively." The markets anticipate that one or both of the resulting businesses could become takeover targets. Google has been identified as a potential suitor for Paypal to bolster its under-performing Google Wallet offering, while eBay itself might be snapped up by its Chinese rival Alibaba.
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Free for all users | see full profile for current activities: According to popular legend, eBay was created by software developer Pierre Omidyar so that his girlfriend could trade her collection of Pez candy dispensers over the internet, and a business phenomenon was born almost by accident. In fact, the truth was a little more calculated than that. Omidyar had already spent several years developing e-commerce software for the fast-expanding internet, and had been a key contributor to the development of eShop, later acquired by Microsoft. As a result he came to realise that the internet could be the perfect medium for buying and selling on a best price auction basis. In 1995, he launched the first version of what was later to become eBay under the name AuctionWeb, as a sideline to his day job as a software developer. The first lot was Omdiyar's broken laser pointer, sold (to a collector of broken laser pointers) for $15. Initially the service was free, and as a result traffic increased rapidly.
In 1996, Omidyar began charging commission on the final sale price achieved, and found that traffic continued to soar, so much so that he gave up other development work to concentrate on the auction business. He tried to register his website under the name he used for software freelancing, Echo Bay Technology, but the Echobay.com domain name was already taken, so Omidyar shortened it to eBay. At the same time he recruited entrepreneurial college buddy Jeff Skoll as his business partner. Meg Whitman, formerly general manager of Hasbro's preschool division, joined as CEO in 1997.
The company floated in 1998, and also agreed a three-year alliance with AOL to promote the site to its members. User levels continued to sky-rocket, with eBay's technology only just keeping up with the demand, so much so that in 1999, the massive demand caused eBay's servers to crash, taking the business out of service for almost 24 hours. Meanwhile, the group began to expand its presence, acquiring offline San Francisco auction house Butterfield & Butterfield (sold on in 2002 to Bonhams), and establishing its first presence in Europe with the launch of a UK site and the purchase of Germany auction site Alando.de. In 2000, eBay moved into Japan in a partnership with NEC, but the local site failed to dent the stranglehold built up by Yahoo's local auction service and was shut down two years later. The group also acquired Half.com, a would-be rival to entertainment retailer Amazon in the US.
The group has steadily expanded its global presence through the acquisition and absorption of rival services in local markets. In 2003, it consolidated its presence in China with the purchase of the country's biggest e-commerce business, EachNet. During 2004, the group acquired several other regional businesses including mobile.de of Germany, India's Baazee.com, Auction.co.kr of Korea, and Marktplaats in the Netherlands.
In 2006, the group was commissioned by a group of leading advertisers, including Lexus, Wal-Mart, HP and Microsoft to construct a prototype auction-style media exchange that could be used to trade TV advertising space in real time. The system, named eBay Media Marketplace, was set to go live in Spring 2007, but the planned launch was cancelled in April after the Cabletelevision Advertising Bureau said its members, which include most of the main US cable networks, would not participate in the service unless further improvements were made. The main US broadcast networks, as well as several leading media buying networks, had already withdrawn their support, citing concerns over the commoditisation of advertising inventory. However, eBay and its partners were eventually able to secure a test trial with women's cable network Oxygen, and opened up the system to 2,300 radio stations as well through a partnership with start-up Bid4Spots. The trial proved something of a disappointment, however, and the service was shuttered in June 2008.
Meg Whitman retired as president & CEO at the end of March 2008. John Donahoe was named as her successor. See full profile for current activities
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