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The Poorly Run AdWords Account: An eBay Case Study

by Larry Kim  |  
April 22, 2013

Recently, eBay announced that the company is pulling the plug on its AdWords account and pointed to its recent research that paid ads don’t work.

A lot of things don’t work when you don’t use them properly (you can’t take a shower in your dishwasher), however, and eBay seems to have conducted a shocking number of silly things in its AdWords account.

The good news for marketing professionals is that eBay provides an excellent example of how not to run a search marketing campaign.

eBay Puts Its Account on Cruise Control

AdWords accounts require thoughtful account build-out and maintenance  to ensure best results, but eBay appears to have left its account on cruise control, as demonstrated by its aggressive use of Dynamic Keyword Insertion (DKI).

DKI allows AdWords advertisers to automatically have a user’s search query automatically appear in the headline of their ad text. That can be a great technique when used correctly. However, eBay appears to have copied around 170 million keywords and run them all using DKI. From those ads, it would appear that eBay has some pretty disturbing items for sale.

For example, someone should notify the folks of Sleepy Hollow.

And drunk college students have finally found a way to make some extra cash---cash to further their poor drinking habits.

You can check out some other examples here.

In AdWords, Dumb Ads Cost More

eBay has done a pretty bad job with its ads. Bizarre, boring, and repetitive ad text combined with aggressive use of DKI is a recipe for disaster.

The company could also benefit from the use of negative keywords, which let advertisers specify exclusionary words for which they do not want to appear. (Vomit would be a fantastic negative keyword, for example.)

However, eBay’s weird ads aren't just ineffective---they also cost eBay tons of money.

In an effort to motivate advertisers to create quality ads, Google created a factor called Quality Score. In AdWords, Quality Score determines how well crafted your ad text is and rates your ad on a score from 1-10. Highly rated ads are rewarded with reduced cost for clicks and premium ad positioning, while ads with low quality scores cost ridiculously high sums for even one click as a deterrent for creating terrible ads, which are often useless and not helpful for users.

Considering how strange many of eBay’s ads are, the company is probably paying a fortune for the few clicks its ads do receive---clicks that probably rarely convert to sales (no vomit or severed heads to purchase here). The combination of high click costs and low conversion rates likely makes positive ROI difficult to achieve.

eBay Took Years to Figure Out It Was Failing at AdWords

I’m most surprised that it took eBay around 10 years to figure out it has been failing at AdWords. eBay’s funny ads have been a fixture on Google search results pages for many years. Yet rather than fixing the problem, eBay has been sitting back and watching its AdWords account run into the ground.

What’s truly sad is that paid search is one of the few advertising mediums where measuring ad performance is relatively easier than conventional offline advertising. With the right tools and know-how, online advertising technology allows advertisers to track impressions, clicks, and conversions, and to conduct A/B testing, which enables advertisers to pinpoint what is going wrong (or right) in their account.

I estimate that eBay had previously been one of the biggest online ad spenders in the retail and shopping industry, but  it appears that for more than 10 years, eBay still hasn't quite figured out its account performance, despite conversion tracking being one of the most fundamental online advertising best practices.

How can eBay expect online advertising to work for it when the company has been sinking hundreds of millions of dollars into a broken setup for years?

Paid Search Doesn’t Work for eBay Due to Laziness

Any online advertising expert will tell you that a paid search campaign needs ongoing attention to be truly successful. Online ads can bring great results, but they require some effort in terms of keyword selection, ad copy creation, and other factors.  eBay’s history of poor AdWords ads demonstrate the lack of effort and creativity that eBay has been putting into its account over the years.

The good news is that eBay’s failure doesn’t have to be yours. The eBay’s AdWords account is a prime example of what you absolutely should not be doing in paid search. Learn from eBay’s blunders to make paid search work for your business.

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Larry Kim is the founder/CTO of WordStream Inc., provider of the AdWords Grader and 20 Minute PPC Work Week.

Google+: Larry Kim

Twitter: @larrykim

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  • by manuel moreira Tue Apr 23, 2013 via blog

    Doing DKI for the keyword ebay on broad or phrase match is a brilliant move. Not.
    And the ad creatives are poor to say the least.

    The campaigns failed on several fronts, which for an ad spender like Ebay is weird, very weird.

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