eBay (EBAY) Study Sparks Debate About Value of Google (GOOG) Paid Search
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Rating Summary:
41 Buy, 6 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 9 | Down: 16 | New: 15
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A research paper by eBay (Nasdaq: EBAY) this week called into question the value of paid search advertising on Google (Nasdaq: GOOG). Analysts at pivotal questioned the validity of the study, especially for those advertisers who are not eBay.
eBay tested the theory by "going dark" and concluded that brand-keyword ads have no short-term benefits. "For a well-known brand like eBay, the efficacy of SEM is limited at best" said researchers. Researchers also said they think well known brands spend too much on an ineffective marketing channel.
"While the merits of their research may be valid for eBay, we think conclusions would not necessarily hold for other advertisers, and more importantly, the study presumed that ad budgets are determined by factors such as return-on-investment, which we believe to be incorrect," countered analyst Brian Wieser.
"In our view, advertising exists for many advertisers less because it drives growth, but because it allows a marketer to avoid loss. EBay would not likely lose share of a market in which it is utterly dominant if it stopped advertising. But a P&G (NYSE: PG) brand might lose share to a competitive Unilever (NYSE: UN) brand if P&G stopped while Unilever kept spending," added the analyst.
Shares of Google are lower by 1.9 percent this week.
Pivotal Research has a Hold rating on Google with a price target of $820.00
For an analyst ratings summary and ratings history on Google (NASDAQ: GOOG) click here. For more ratings news on Google click here.
Shares of Google closed at $821.54 yesterday.
eBay tested the theory by "going dark" and concluded that brand-keyword ads have no short-term benefits. "For a well-known brand like eBay, the efficacy of SEM is limited at best" said researchers. Researchers also said they think well known brands spend too much on an ineffective marketing channel.
"While the merits of their research may be valid for eBay, we think conclusions would not necessarily hold for other advertisers, and more importantly, the study presumed that ad budgets are determined by factors such as return-on-investment, which we believe to be incorrect," countered analyst Brian Wieser.
"In our view, advertising exists for many advertisers less because it drives growth, but because it allows a marketer to avoid loss. EBay would not likely lose share of a market in which it is utterly dominant if it stopped advertising. But a P&G (NYSE: PG) brand might lose share to a competitive Unilever (NYSE: UN) brand if P&G stopped while Unilever kept spending," added the analyst.
Shares of Google are lower by 1.9 percent this week.
Pivotal Research has a Hold rating on Google with a price target of $820.00
For an analyst ratings summary and ratings history on Google (NASDAQ: GOOG) click here. For more ratings news on Google click here.
Shares of Google closed at $821.54 yesterday.
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