EBay: TV or Not TV - Company Business and Marketing

Industry Standard, The, Oct 16, 2000 by Jennifer Couzin

After five years of building a brand without television commercials, the online auctioneer has decided to launch an ad campaign.

E BAY HAS LONG BEEN SOMETHING OF an aberration among Internet retailers. With a distinct and successful business model, the online auctioneer has proved a sensation at viral marketing: Nearly all of its 16 million users were drawn to the site via word of mouth. The company hasn't wrapped a fleet of taxicabs in its logo, spent millions on television advertising or sent employees into the street to hand out free Beanie Babies. The closest thing it's done to traditional marketing is some portal deals with America Online and Disney's Go.com.

But five years after it launched, eBay has decided that viral is no longer enough. After a joint advertising campaign with Visa that was broadcast during the television show Survivor and the Olympics (and was paid for by the credit card manufacturer), eBay is preparing to run its own ads early next year. The details are still being worked out, and company executives won't discuss the campaign's theme or cost.

Not surprisingly, though, eBay's new television strategy differs from that of even the most creative dot-com companies. For one, the auctioneer's clout has landed it millions of dollars in free advertising. In addition to the Visa campaign, eBay has signed partnerships with several cable networks for tie-ins and promotions during key moments in their shows. For example, a show on the History Channel called History's Lost and Found began its new season last week. Among other items, the show featured one of two deck chairs retrieved from the Titanic. How to get this item into your living room? Log on to eBay, of course, where the chair's price climbed past $180,000.

While eBay's TV strategy attempts to persuade more people to buy on the site, it also hopes to shift the perception the public has of the online auctioneer. As it moves well beyond collectibles, eBay wants to remind potential customers that they can also purchase mass-market items like cars and computers on the site. "We get defined by the weird stuff," says Jim Davis, eBay's VP of marketing. Sure, the company has strong brand recognition, but it wants to broaden it. Robert Riccardi, a partner at Goodby Silverstein & Partner, the agency handling eBay's campaign, explains the mission this way: "You're shifting a perception that people already have, [which is] better than having no perception at all."

Still, eBay doesn't want to see its low customer-acquisition cost, which hovers around $13, shoot up. It plans to experiment with TV ads, airing them in selected markets before deciding to go nationwide.

EBay's reluctance to advertise widely on television differs from that of almost every other online retailer. Priceline struck a multimillion-dollar stock deal with former Star Trekkie William Shatner to get him as a spokesman. EToys, which spent $26 million on advertising in the fourth quarter of 1999, is known for its commercials showing children longing to imitate their parents. "Our philosophy from the beginning has been to build a well known brand;' says Gary Gerdemann, a spokesman for eToys.

Indeed, brand-building is the mantra for most e-commerce companies' ad campaigns. EBay's strategy, meanwhile, more closely resembles that of some established offline retailers, which advertise not only to remind people they exist but also to shift perceptions of what they're about.