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eBay and Google set to start replacing tired advertising models

It's pretty well known that Google's (NASDAQ: GOOG) AdWords internet advertising system works. It combines the auction format of letting advertising customers compete against each other for advertising spots along with customer responsiveness to ads in order to determine which advertisers see premium placement on Google properties. This type of "customer relevancy" combined with an auction format keyword bidding has made Google, well, the most successful advertiser on the internet.

But, when it comes to internet and auction, don't ever count out eBay (NASDAQ: EBAY). The world's largest auction web property wants to up the ante (so to speak) in creating an auction-based sales system that would put it directly in the crosshairs of Google. How so, might you ask? As Zac Bissonnette mentioned yesterday, ebay is making it possible for radio stations to auction off ad-time. Intriguing. Is this only the beginning for eBay? Although both eBay and Google are relative newcomers to the field of brokering advertising for television and radio, the lukewarm response to television brokering has already sent a signal. What's next?

Even if radio and television brokering ends up not working as well as planned for both eBay and Google, eventually the age-old model of ad brokering that's existed for decades will fall as some old paradigms shift. Google has already shown (and eBay as well) that giving customers a choice and putting them in control can lead to much greater things when compared to the protectionist system of relying on higher fees for airtime for traditional ad models that are working (and slowing) today in the television and radio markets. There is a reason more money is moving to internet advertising and away from television and radio networks: The customer interaction and advertising customization is years ahead of the old way of advertising. Leaders like eBay and Google know this, and also know that as old models of advertising and brokering pieces of advertising, there will be new models in television, radio and print needing to step in and take over. It's not a question of if, but when.

eBay raises fees yet again... is another seller revolt coming?

Oh no, here we go again. Melly covered the recent news from this morning about eBay Inc.'s (NASDAQ:EBAY) new fee increases, but I had to chime in with a perspective since the last time this happened, some eBay sellers seemed to go off the deep end.

Bill Cobb, President of eBay, has just sent out a mass email to eBay sellers with the information that more fee increases are coming. The last time this happened at the end of the summer in 2006, Sheldon Liber and I had quite a time with posts about eBay and some of the most salient reader comments I've yet seen came in about the various posts.

Well, here are now, with yet another set of fees about to hit eBay sellers at the end of January (details here). Will this cause another complete and utter outpouring of madness, disgust, and 'seller revolt' like what appeared to happen the last time around?

While that is not clear, expect the blogosphere, message boards, and just about every other interactive medium on the 'net to light up this week regarding the new fee increases. When is enough enough? I am not sure how to answer that, but the brand power eBay has apparently has given the company the confidence to know it can jack up fees regularly and still say in business quite well. That is, unless, sellers revolt -- and strongly.

eBay's stock has had one bumpy ride in the last six years

Although Jim Cramer loves eBay Inc. (NASDAQ:EBAY) and thinks all the bad press and bad feelings are already priced into the stock, the company has had a disastrous 2006 in regards to its stock performance. The numbers don't lie -- and there are some who are picking up positions in the world's largest online auction website for *if* the company's fortunes turn around. Never say "when", though -- only "if."

Hey - eBay has no debt and continues to do solid business, although there are laundry lists of things that the auction giant fails at -- like customer communication, bad customer service, increasing fees and about a million other things. Still, from a purely financial standpoint, the company is in great shape. Any company with eBay's scale that has little to no debt should be considered pretty darn decent. But, how decent?

Since the total returns on eBay has been all-over-the-map, it scares those not used to volatile stock price swings. Such swings occur sometimes over the course of a few years. EBay stock had incredible gains from 103%, 91% and 80% in 2001, 2003 and 2004 respectively to declines of 63%, 47% and 23% in 2005, 2000 and 2006. Now, that's volatile. Where do you stand on eBay shares (not the company itself)?

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Last updated: December 04, 2008: 10:43 PM

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