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Are eBay and Groupon Sponsored Ads Helping or Hurting Small Business Owners?



Last week, I clicked through a link on an email from eBay and found a strange thing  – a string of sponsored links across the top of my listing. Well, they call them sponsored links but they’re much more than that. They’re actually bold advertisements for people who are selling the same things I’m selling.

sponsored links ebay

I did a few experiments and found that when I’m looking at an item detail page as a buyer, these links show up at the bottom of the page, so I probably never noticed them before. But when I click from a listing link in an email, they show up on top. Maybe the concept is, I’ve already bought an item, so these are related items.

What bothers me is that these links send my customers to another seller’s store. In my case, it’s not a huge problem because I only sell random items, so it’s likely that I’m not losing any business. But suppose I was a DVD dealer with every season of The Big Bang Theory in my store. Customer buys Season One. He comes back to eBay on my link and sees Season Two is available from another dealer. I have it in my store, but will the customer bother to look when there’s an offer right in front of him?

This simply doesn’t feel right. There’s already enough competition between sellers on eBay but now I have to compete with the people who can afford to buy an ad. What’s next? Sponsored listings knocking my listings below the fold, probably. Not saying that’s going to happen but it’s the next logical step.

I was pondering this issue when I came across an article about Groupon’s dirty ad dealings on StreetFight.

The post author says that Groupon is using Google AdWords to bid on the names of businesses who use Groupon. For example, Lifestyle Salon in NYC.

groupon google ad

Look at that, Groupon has the top listing on Google. And with them shouting 68% off TODAY, who’s going to click on the link that goes to the official company website? Nobody.  Sean Barkulius of Street Fight found dozens of instances of this kind of behavior. Following his lead, I found one on the first try.

Groupon responded to his article, saying that it was standard practice and was actually helpful to the small business owners.

Groupon PR manager Nicholas Halliwell said about the branded search practice. “It’s the same thing that can be said for a billboard or a television commercial. This is something that we pay out of our own pocket for our merchant partners, we promote their deals over a variety of mediums that are out there, and the merchant can opt out of it at any time.”

Halliwell went on to say that only a “small amount” of traffic comes from those branded search ads. . . if that’s true, why do they bother?

Businesses go to Groupon to look for new customers – someone who might not find the company if they didn’t have a deal fluttering in front of their face. But when someone searches a company name on Google, they’re already predisposed to buying and Groupon is snatching that buyer away with their ad.

What do you think? Are Groupon and eBay helping or hurting small businesses with their paid ad practices?