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At a time when ecommerce marketplaces are building stronger retail media businesses, eBay is posting gains in advertising.
“Our marketplace continues to benefit from innovation in our advertising business, which delivered strong growth in Q4 despite headwinds in the broader digital ad market,” eBay CEO Jamie Iannone said on a call Wednesday to recap fourth quarter results.
The company shared the following data on its advertising business:
Promoted listings revenue rose 27% to $276 million. That was more than 30 points faster than GMV growth.
Over 2 million sellers adopted at least one ad product in Q4.
Live voted listings topped 700 million.
Ad revenue is nearing 1.8% of GMV for eBay.
The top performing ad unit was the standard promoted listing.
Newer ad products, including an advanced promoted listing, grew by more than 20%.
“Seller adoption of advanced has grown, as we have expanded access and automated more elements of campaign management to make this powerful ad unit easier to use,” Iannone said.
eBay also recently launched additional ad features:
Quick setup. This is a one-click campaign creation tool for CPC advertisers in which eBay automates and optimizes campaign structure, ad groups targeting and keyword bids.
Multiuser account access across advertising accounts enables eBay sellers to delegate campaign management to third parties such as brands or ad agencies.
How big can eBay's ad business be?
Iannone said eBay’s advertising business has room to grow. Currently, it is 1.8% of GMV. Company leaders see a path to grow that penetration.
“We have line of sight to 3%, which we still feel great about. If you look at the performance, promoted listing standard continues to be the workhorse of the product, and we're continuing to drive additional penetration there, hitting 2 million sellers and 700 million listings,” Iannone said. “But we're also excited by our new products.”
What’s driving growth?
eBay is among the platforms that are realizing gains in advertising as a result of the wider rise of ecommerce and the recent importance of first-party data, which is collected through direct purchases and loyalty programs.
Privacy-oriented changes in the digital ad landscape such as App Tracking Transparency made the ability to use this purchase level data for targeting within a single platform more valuable. eBay is an example of a retail media network that uses this data to offer advertising within its marketplace.
eBay also made changes to its advertising products. It shifted from display advertising to the promoted listings and CPC ads found on platforms like Google and Amazon.
"This extraordinary result was primarily driven by optimization and performance improvements in our standard promoted listings product, CFO Steve Priest told analysts. "Healthy growth in our newer products, most notably our cost per click as also contributed meaningfully. Our legacy third-party display ads were weaker in Q4 due to industry-wide headwinds over the holidays, but these ads represent an increasingly smaller portion of our mix."
While social media businesses like Meta and Snap are facing slowdowns in advertising, retail media is growing. eBay is one example. Amazon Advertising grew 19% in the most recent quarter, while Walmart Connect grew 41% in the fourth quarter and became a $2.7 billion business in 2022.
Increasingly, marketplaces like eBay are in the retail media business just as much as they are in the ecommerce business.
Trending in Marketing
New advertising opportunities are being beta tested for in-store audio and product demos.
Retail media’s fast growth isn’t only limited to increasing spend. The advertising itself is also poised to appear in more places beyond ecommerce marketplaces, and even beyond the web.
The latest example comes from Walmart Connect, which is the retail media arm of the world’s largest retailer.
Walmart shared details on testing that it is completing for in-store retail media. To this point, Walmart Connect has been considered the advertising platform for Walmart’s ecommerce site. But these tests indicate that’s poised to expand.
Stores present a potent opportunity for Walmart. It has 4,700 big box locations around the U.S., and customers returned to them in droves last year. In 2022, 88% of the retailer’s customers visited Walmart stores.
Walmart Connect already has already dipped a toe into in-store advertising, with a TV wall, self-checkout ads and integrated marketing. The new pilots aim to take a step further.
“The next frontier of retail media is in-store experiences, and it’s one we’re excited to chart,” Whitney Cooper, head of omnichannel transformation at Walmart Connect, wrote in a blog post on the new tests. “But it’s still an emerging opportunity for us, as we continue to test what serves customers best and which solutions are scalable to Walmart’s size.”
Here’s a look at the two new offerings currently under beta test:
Walmart suppliers will be able to integrate product demos into campaigns across in-store and digital environments.
Product demos aren’t new to store floors, but Walmart Connect is seeking to give them an update that blends digital and physical experiences.
“Part of our test is how to enhance the omnichannel experience by bridging the physical back to digital: For example, by pairing a demo cart with QR codes that link back to a curated Walmart.com landing page so customers can find inspiration and shop their list all in one spot,” Cooper wrote.
Walmart is currently offering 120 demos at stores each weekend, and plans to scale to 1,000 by the end of 2023.
Walmart Connect will now offer advertising placements on Walmart’s in-store radio network. Suppliers will have the option to purchase ads by region or store, enabling targeting of key markets.
“This is the first time brands will be able to speak directly to Walmart customers through this medium,” Cooper writes. “These ads also create a new upper-funnel touchpoint for brand marketers and out-of-home (OOH) buyers to create awareness, because in-store audio is about connecting with customers wherever they are in the store — they don’t have to pass the brand in the aisle.”
With the tests, we’ll be watching for how this advertising is measured, and whether Walmart Connect is tracking impact across different types of formats, and not just a single campaign.