eBay’s chief financial officer Bob Swan said that Google wasn’t driving as much search engine optimization traffic to eBay’s auction business, which adversely impacted growth (I’ve bolded the key part):
Now, let’s turn to the Marketplaces business. Marketplaces delivered $2.2 billion in revenue, which grew 6%, GMV grew 8%, and operating margin declined 340 basis points. It was a challenging quarter. As John indicated, we got off to a good start, but we had significant obstacles late May.
The combination of the cyberattack and the Google SEO had an immediate and dramatic impact on GMV growth. June GMV growth was 7% driven by slower active buyer growth and lower conversion. In light of these events, we have made significant investments to get eBay users reengaged, including couponing, seller incentives and increased marketing spend . . .
The $200 Million Penalty?
Later in the call. Swan mentioned that the SEO issues impacted the ability to attract new people to eBay (I’ve bolded the key part):
The consistency was quick, swift and immediate impact when we know – when we were not letting people in the door until they reset their password and/or we weren’t getting the new buyer traffic from SEO.
Swan also gave an indication of the upper limit of what the penalty may ultimately have cost eBay:
As a result we are lowering our high end full year revenue guidance by $200 million from $18.5 billion to $18.3 billion.
In short, eBay expects to earn $200 million less than it initially forecast. Not all of the drop is due to the problems with SEO traffic from Google, but that is the on-going problem that’s not easily fixed, eBay says. Consider the $200 million the upper-limit of what that problem has cost eBay in potential earnings.
Growing With Better Paid Search & Social
Swan is still optimistic that growth will get back to double-digits, saying:
Yes, we got a couple of body blows in Q2 with they are having to reset the passwords and the SEO change, but we are continuing to invest in this business and we think it’s going to be us one of the winners in e-commerce and we will have strong double-digit growth. That’s our goal. We are focused on it. We still believe that’s achievable.
When asked about doing more marketing for eBay’s listing business, Swan indicated that eBay had decided even before the SEO fallout to do a better job with its SEM/paid search campaigns:
We came into this year saying that we are going to be investing more in the marketing as a percentage of total to drive more demand. That was kind of one of those generic learnings from last year to this year.
We came into this year saying that we are going to be investing more in the marketing as a percentage of total to drive more demand. That was kind of one of those generic learnings from last year to this year.
we came into this year saying that we are going to be investing more in the marketing as a percentage of total to drive more demand. That was kind of one of those generic learnings from last year to this year. So pre-password reset and SEO we were in fact stepping up our level of spend.
In terms of how we drive traffic more specifically, obviously we got a great brand, so the majority of our traffic continues to come direct because of the eBay brand. And then on keyword buy being less generic about where it makes sense and more specific and particular geographies is one of the test and learn things we do take of a generic spend to be more specific.
And then third is CRM, all of this data that we accumulate on this site we are going to be increasingly smarter and sharper about how do we use that data to reach back out directly with CRM and email campaigns to bring that traffic back to the site.
And then fourth one I would just say is we continue to in the test and learn bucket that John highlighted is social, how do we divert or reallocate some of our money to more social channels to drive engagement and curation.
