eBay advertising grows 27%, and execs say it will only get bigger

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.