eBay Inc.
| Author | Guy Cunningham |
| Pages | 493-499 |
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2145 Hamilton Avenue
San Jose, California 95125
USA
Telephone: (408) 376-7400
Fax: (408) 369-4855
Web site: www.ebay.com
In 1995 eBay Inc. was founded in San Jose, California. It was an online site, located at www.ebay.com, that enabled users to buy and sell items from other users. Rather than sell items itself, eBay made money by charging fees on completed transactions and by charging for advertisements on its website. In 2003 more than 900 million items were posted for sale on eBay. These items included automobiles. Because of their relatively high prices, automobile sales generated larger fees than many other kinds of sales. In the arena of used-car sales, however, the company faced competition from online search engines such as Google and Yahoo! as well as from traditional newspaper advertisements.
EBay charged the ad agency Goodby, Silverstein & Partners, based in nearby San Francisco, with developing a radio spot that would inform consumers of the benefits of using eBay to sell automobiles. The result was a humorous 60-second spot called "Abbreviated." The spot featured a narrator using an "abbreviated" language culled from newspaper classified ads. Rather than just telling listeners that classified ads did not provide enough space to adequately describe an automobile, the narrator demonstrated this through his own speech. Then he touted the benefits of selling cars on eBay.
The spot was a hit with critics. In 2005 it won a Silver Lion at the International Advertising Festival, a 2005 Bronze Clio Award, and the top prize at the annual Radio Mercury Awards. These awards, however, came after eBay's decision in March 2005 to part ways with Goodby, Silverstein & Partners. The company elected to work with BBDO on future campaigns. EBay felt that the larger New York-based agency was better equipped to handle integrated campaigns that combined online, televised, and radio elements. Both agencies were part of the larger communications company the Omnicom Group.
The San Jose-based eBay was created to capitalize on the increasing expansion of the Internet into everyday life in the United States and around the world. The company provided sellers and consumers a platform where they could find each other and conduct transactions. Sellers offered a wide range of goods via the eBay website, www.ebay.com, including sneakers, automobiles, furniture, clothing, and collectibles. The site was best known for the online auctions that it enabled. Sellers posted an item on www.ebay.com, and buyers could view the item and bid on it. The highest bidder purchased the item.
As the Internet became more popular, eBay was able to expand quickly, and the company set up companion sites around the world. Soon eBay began describing itself
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as "The World's Online Marketplace." The company's profits came via fees it collected on each transaction as well as from advertising it sold on its assorted websites. The approach was largely successful, and in 2003 alone more than 900 million items were listed on eBay. By 2004 eBay was offering the PayPal service, which enabled buyers to pay sellers through their credit cards or via secure account transfers. There were several subsections to the eBay site, including one for automobile sales, labeled "eBay Motors." Consumers could search cars by make and model or by price. Because higher-priced items generated higher fees, the company made more money from automobile sales than it did from many other items sold via www.ebay.com.
At the outset eBay relied on word of mouth to promote its business. As the company became more successful, it branched out into print and radio advertising. In 2002 eBay conducted its first television campaign, "Do It eBay," which was developed by Goodby, Silverstein & Partners. The San Francisco-based agency had been responsible for all of the company's radio advertising through 2004 as well. Goodby, Silverstein & Partners was best known for its award-winning "Got Milk" campaign on behalf of the California Milk Processor Board. The agency was founded in 1983 by Jeff Goodby and Rich Silverstein, who had previously worked together at the Ogilvy & Mather agency.
EBay usually aimed for a very large target market. The company wanted to be the destination of choice for anyone shopping online. The website had always been especially popular with collectors, who used the site to track down rare and hard-to-find items, such as out-of-print records or idiosyncratic household goods.
The site listed many types of items for sale, however, and it was also a major attraction for bargain shoppers and consumers who were comfortable doing their shopping online. The company also allowed people to sell automobiles on the site. These were expensive items, which meant that the company collected higher fees on such transactions. The kind of shopper that bought an automobile on eBay was a typical used-car shopper: younger and on a budget. The company saw automobile sales as a prime candidate for growth.
The most serious competitor for eBay, especially for big-ticket items such as automobiles, was the search engine Google. Like eBay, Google did not sell anything itself. Instead, consumers used Google's website to search for items online. For example, a used-car dealer or an individual would post on a website the vehicles they had for sale, and buyers would find the site via Google. Other search engines, such as Yahoo!, offered similar services. In fact, Yahoo! even allowed sellers to post ads that would appear in the Yahoo! Autos section of the search engine's website, www.yahoo.com. Although neither of these companies provided online auction services, they competed with eBay by providing an alternative way for consumers to buy automobiles online.
The company was even more concerned, however, about its off-line competitors. While certain products, such as music files, collectibles, or books, seemed to attract online buyers easily, most consumers were accustomed to buying automobiles through off-line means, such as classified advertisements in newspapers. To grow its automobile-selling business eBay needed to lure more of these people into buying (and selling) automobiles on ebay.com.
The most common type of transaction on eBay's website was an auction. To list an item for auction, a seller was required to register with eBay. Then he or she chose whether or not to offer a "Buy It Now" option for the item. This was a feature that allowed a buyer to purchase the item outright, bypassing the auction. After...
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