Why Did Google’s SEO Penalty Cost eBay $200 Million?

Lorna Rose Gill Posted by Lorna Rose Gill

Search Engine Land recently estimated that the manual penalty against eBay.co.uk may have cost the company up to $200 million. We decided to look at how they might have arrived at that number.

In eBay’s Q2 2014 earnings call, CFO Bob Swan candidly mentioned that “Google SEO” presented a significant obstacle in May, slowing growth of eBay’s key business metric, “Gross Merchandise Volume.” In short, the Google manual penalty impacted new buyer traffic to eBay, which combined with the recent password hack, caused Bob Swan, Chief Financial Officer and Senior Vice President of Finance at eBay Inc., to revise the year end revenue estimation down by $200 million.

Whilst the password hack meant that eBay’s regular users had to reset their password, the penalty meant that the auction site was not attracting new buyer traffic, which is critical to any business.

A strong indicator of how reliant they are on generating new customers from search is their PPC campaign strategy. They’re the original dynamic keyword insertion (DKI) advertiser – eBay will apparently try to sell something on every possible keyword combination. And they’re well known for running ads that suck or are just totally inappropriate as a result.

Further evidence of pressure on eBay to succeed in SEO is provided by their own lab. The company made headlines last year when economists from eBay’s Research Lab released a study which claimed that the company’s paid search ads were not working efficiently. Specifically the study found that by switching off their paid search ads on brand terms, eBay saw no real uplift in sales and in the categories they did, the profits were insubstantial due to the cost of the campaign.

In the earnings call, Swan said that the company has been testing new PPC strategies where they are targeting more specific niches and local areas and reducing generic keyword buys. So, whilst eBay may have identified some wasted budget on brand terms, they shifted those savings to spending elsewhere, which means that the Google’s SEO penalty must have struck a blow.

Google Penalty Really Did Strike a Blow to eBay UK’s Search Market Share

Diving into Adthena’s data we can see that in the UK, in one niche alone, eBay suffered a significant loss of traffic and also market share to competitors. Adthena’s competitive intelligence charts shown below are tracking the top 100 relevant keywords in the UK Lighting market.

Ebay SEO penalty 6m sov trend to July

Adthena Data on Ebay SEO Penalty; Share of Voice Trend in July

eBay UK’s Traffic Halved By Google SEO Penalty

In this market the company was getting around 14,500 clicks from organic search every week, until the manual penalty hit around May 18th. The penalty had an immediate impact on their organic search traffic, cutting their traffic by over 50% down to an estimated 6500 clicks per month from the same search queries.

Ebay SEO Penalty - 6m Traffic Trend

Adthena Data on Ebay SEO Penalty; Organic Traffic Trend

eBay UK’s Ad Rank Drop From Google SEO Penalty

The plunging traffic numbers are accounted for by an average drop of two positions on all the terms as a result of Google’s SEO penalty, which pushed the eBay UK search positions to below the browser fold to around position 6.

Ebay SEO penalty Ad RankTrend

Adthena Data on Ebay SEO Penalty; Ad Rank Trend (Organic)

Net Impact

So, while it might seem absurd to suggest that eBay may be fretting over a readjustment of $200 million, the graphs above show that the Google penalty did have an impact on eBay and vindicate Swan’s decision to revise the eBay earning figures.

Yes, the effective fine of $200 million might be little more than a slap on the wrist from a search giant to an auction giant, but Adthena’s graphs prove that Google is consistent with their word. The threat of a penalty can have a real impact on any brand and a good search marketer probably would rather spend their marketing budgets on effective initiatives rather than saving it as a discretionary fund to bail your company out of a penalty.

About the author

Lorna Rose Gill
Lorna Rose Gill
Lorna is responsible for acquisition marketing at Adthena, communicating their award-winning product and generating demand. She has developed her career in fast-paced, start-up environments, including two tech track 100 companies. She is curious and passionate and likes to find stories in data and technology.