EBay to Broker Radio Ad Time, Stoking Rivalry With Google
Online auctioneer eBay Inc. plans to begin brokering radio advertisements today, in the latest effort by a Web company to sell offline ads via the Internet. The move ratchets up eBay's competition with Google Inc. and could shake up how radio advertising is sold.
Context & Ripple Effects
This is the second act of a Web-versus-radio storyline that has been building since late 2006, when analysts flagged that Google's own radio-ad experiments had hit a snag. Google doubled down anyway, proposing in May 2007 an innovation for the upcoming radio spectrum auction, and eBay is now answering with its core competency: running auctions. Radio ad slots become listings, and the two companies' contest over who intermediates offline media goes head-to-head.
The move also complicates an otherwise cooperative history — eBay formed a partnership with Google in August 2006 hoping it would help monetize the $2.6 billion-plus Skype acquisition (a gamble on the Skype–Google pairing). Brokering ad time puts the partners in direct competition, and the pickup by the New York Times under a headline framing radio time as just another item up for auction shows how cleanly the story maps onto eBay's identity.
First-order effects
- Radio stations get a new, automated sales channel where ad time clears at auction prices rather than negotiated rates, directly challenging the traditional rep-firm model for selling spots.
- Google's radio advertising push, already described as stumbling by analysts in December 2006, gains its first large-scale marketplace rival in eBay.
Second-order effects
- The widening rivalry strains the 2006 Skype-related partnership between the two companies, forcing each to weigh cooperation on voice services against competition in advertising intermediation.
- If auction pricing spreads, radio stations face pressure on rate cards while advertisers gain price discovery — shifting margin from sellers of airtime to whoever runs the exchange.
Third-order effects
- The same displacement dynamic that saw Craigslist and eBay take classified revenue from newspapers is now aimed at broadcast advertising: offline media inventory migrating onto internet-run marketplaces, with exchanges rather than media owners capturing the broker spread.
The trend: Web companies are building auction-based exchanges for offline advertising inventory, moving radio and other legacy media ad sales from negotiated deals toward automated marketplaces run by intermediaries like eBay and Google.