Marketing
23 February 2023
eBay advertising grows 27%, and execs say it will only get bigger
It's another sign of retail media strength.
Photo by Oberon Copeland @veryinformed.com on Unsplash
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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.
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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