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Writer: Source: Advertising Age - Saturday, Feb 09,2008 6:22 AM
International: What's Really Wrong With a Little Media Company Called Ebay

Everybody, of course, has heard of eBay, the massive e-commerce company. But have you heard of eBay, the massive media company?

Yeah, OK, they're one and the same. Actually, I've been arguing for years that eBay is more of a media company than an e-tailer. Now that the company's at a crossroads -- longtime CEO Meg Whitman announced late last month that she'll retire in March, and her successor, John Donahoe, has let it be known that he intends to shake things up. Given eBay's recently declining fortunes -- it might be helpful to stop and reflect on what eBay really does.

For starters, eBay doesn't sell stuff. Its sellers -- an army of independents -- do. Unlike, say, Amazon, eBay doesn't warehouse inventory or spend millions on shipping and handling. That's because it's mostly in the business of handling ones and zeros: the trillions of bits of data that course through its servers. It doesn't even, really, market individual products (though eBay, of course, has engaged in massive branding campaigns and does invest in advertising placements in Google search results for some of its major product categories). Rather, it delegates even the copywriting of individual product pitches to its sellers.

There's actually another company that does something very much like what eBay does -- and, curiously, nobody hesitates to think of it as a media company. Like eBay, Craigslist is all about maintaining a giant, searchable database of listings. It brings buyers and sellers together (it also, famously, brings other parties, like the oversexed and the lonely-hearted, together, but I digress). Of course, it does so, mostly, without extracting fees, because of the admirable sociopolitical sensibilities of its founder, Craig Newmark. Oddly, Newmark regularly gets slammed for single-handedly killing the newspaper classified-ad business, even though eBay, founded in 1995, is four years older (and vastly more profitable) than Craigslist.

Why does it matter, you might be wondering, how eBay thinks of itself? Because when you don't know what business you're in, you lose focus fast. Over the years, eBay forgot that it was in the information business and let its user interface languish. It fell behind, too, on its product-search functionality (new CEO Donahoe has promised to roll out a better system soon). It abused its sellers by repeatedly jacking up fees to pump up its balance sheet. (Donahoe just announced a listing-fee cut but pissed off sellers anew with a new, steeper back-end fee structure.) And it began to think of itself as a glamorous retail destination -- thus its recent "Shop victoriously!" campaign -- when, in fact, shopping on eBay is often a hugely frustrating experience.

My advice to Mr. Donahoe? Stop masquerading as a real merchant. Real merchants have control over their inventory, individual product pitches and fulfillment in ways that eBay, by definition, never will.

Stop pretending there's something inherently glamorous or "victorious" about poking around in your virtual yard sale; that's just a recipe for frustration and disappointment, which is why eBay recently has seen declines in unique visitors.

Remember your real value proposition. Back in 2000, eBay ran TV commercials with a tagline that nailed it: "If you broke it, lost it, need it cheap or just can't find it anywhere else: eBay." (In a recessionary economy, emphasizing that "need-it-cheap" angle in particular is surely the way to go.)

And remember that you live and die by your content -- all the data points you have in your giant eBay spreadsheet at any given time -- and how you present that content and how sellers and buyers interact with that content.

Mostly, though, just remember that you are -- no kidding! -- in the media business.

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