In what could be a serious blow to every retailer and online advertising network on the Web (heads-up Google and Yahoo), eBay has announced they will begin selling contextual advertising to eBay sellers, to be placed on affiliate websites. For a cut of the profits, eBay will provide direct links to a seller's items on various websites, determined by keywords on those sites' Web pages. And the links lead only to eBay auctions and nowhere else.
For instance, if I plan to sell my collection of baseball cards on eBay, I can make sure that potential buyers will be exposed to my product by placing ads on various collector sites, blogs or discussion forums. In addition, as my listings change, advertising automatically changes on those affiliated websites to reflect my new products or services.
It's a potential windfall for everyone in the eBay network. Not only for eBay and eBay sellers, but it also provides a new and widespread opportunity for affiliate sites - website owners both large and small that stand to earn 35-60 percent of sales that come through a consumer clicking to eBay from their site's advertisement. With such an enormous marketplace, affiliate sites are sure to get clicks from the millions of products available on eBay - gaining profits for the affiliate, eBay, the seller and PayPal (owned by eBay).
The impact of eBay's new system will unfold in due time, while Yahoo, Google and MSN figure out their next steps to compete. If nothing else, eBay has greatly expanded their reach. Those who have been living in a cave for the past decade and have never visited eBay will now be tempted all over the Web.