EBay Partnerships Show Its Sophistication

EBay Inc. has more than tripled the number of its marketing and advertising partners from nearly 30 in 2002 to 100 this year, indicating the growing importance of strategic partnerships for the world's largest auction site.

Dr Pepper/7UP, IBM Corp., Absolut, MBNA, United Parcel Service, Hasbro, Hilton Hotels and American Airlines are among the companies using eBay for product launches, event promotions, cause marketing and rewards.

“We're interested in marketing partnerships, not just licensing the technology,” said Don Albert, eBay's senior director of business development for strategic partnerships. “We lend our brand to these programs and drive our audience to them.”

The environment is certainly there. EBay claims 85.5 million registered users worldwide who trade in 35,000 categories. Individuals and small businesses make up 95 percent of the trading community.

At any given moment, 19 million items are on the site, with more than 2 million added daily. On an annualized basis, eBay users trade more than $729 worth of products on the site each second.

This traffic and traction attracts marketers as they strive to build brand loyalty and better relationships with customers. Not surprisingly, eBay is growing increasingly sophisticated parlaying its heft in auctions to other aspects of online marketing and retail.

Consider the deal announced in mid-October with Universal Music Group. The Santa Monica, CA, record company opened a Universal Music Store on eBay. A new retail channel, it offers weekly online sales and auction promotions, new releases, catalogs as well as hard-to-find music and artist memorabilia.

The Universal store also provides concert tickets, backstage passes and invitations to video shoots. For example, it includes Bon Jovi's signed guitars and handwritten lyrics, front-row tickets to Jay-Z's performance at New York's Madison Square Garden and a personal drum lesson with Nickelback drummer Ryan Vikedal. The auctions expired by end of October.

Similarly, eBay users can place bids or buy for a fixed price records and vinyl albums like John Coltrane's “Live at Birdland” and Jimi Hendrix's “Are You Experienced?” as well as autographed box sets from Universal artists.

Universal rival Walt Disney Co. is using eBay for Disney Auctions. The Burbank, CA, company is using its store to offload Disney merchandise and collectibles, and as a promotional venue for movie releases.

Like many marketers, eBay partners find their products under auction on eBay, with little control over the environment. The automotive category is a prime example. EBay Motors sold used cars worth $6.7 billion, the largest category for the company.

BMWs were among the cars selling online. The German automaker decided it was more prudent to participate in the process than sit on the sidelines. It created an eBay-tailored showroom for certified pre-owned BMWs.

Begun in the summer, the BMW showroom is a pilot program with a number of dealers that will fulfill sales. The company is considering a rollout to all its dealers nationwide.

7UP, for its part, chose eBay to debut dnL, a Mountain Dew competitor that is “7UP” when read upside down. To generate awareness and buzz, the beverage marketer last fall auctioned cases of the new product with a trip to the Grammys in the first case. Also, the first 31 cases off the assembly line came with a certificate of authenticity.

The auction worked. Each case sold for more than $400.

“People were actually going to their local stores, buying it and listing on eBay,” Albert said, adding that they did not know the official auction applied only to the first dnL batches from the 7UP plant.

Bolstering its position as an online retailer, eBay on Oct. 2 formally launched its Anything Points credit card co-branded with MBNA. Cardholders not only earn points by buying on myriad eBay categories, they earn Anything Points with eBay partners FTD, Sprint, NetFlix, LendingTree and The New York Times.

Another new revenue stream is eBay home page sponsorship and keyword advertising. It offers marketers a chance to advertise whenever consumers search for a relevant product on the site.

These efforts reveal eBay's increasing sophistication as it evolves into an e-commerce player like Amazon and Yahoo.

“From a revenue standpoint, these partnerships will always be a tiny percentage of eBay's revenue,” Albert said. “But we believe these relationships are important because of the value they add to our community. We believe these partnerships are important because it can help drive the future growth of eBay's business.”

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