By Eric Auchard
Web search leader Google Inc. will supply online auctioneer eBay Inc. with Web search advertising outside the United States, and the two will join forces on "click-to-call" ads that link online shoppers to vendors, the companies said on Monday.
Paid search advertising lets marketers bid for ad space next to keyword search results.
EBay, whose shares were up 3 percent, said that for international online text advertising, it will rely exclusively on Google instead of Yahoo Inc. which in May struck a parallel deal to handle eBay's U.S. ads.
The eBay contract is part of a string of deals for Google this month. It also plans to begin testing an ad-supported Web video syndication system with Viacom Inc.'s MTV Networks, and it has struck a deal to supply ads to MySpace users and other Web properties of News Corp.
The deal with eBay "is the most important of these areas," Google Chief Executive Eric Schmidt said in a phone interview.
"You can now see Google's strategy in each of these new markets," Schmidt said of MTV Web video, the MySpace community, and eBay e-commerce partnerships. "These are very large businesses for us."
Separately, on Sunday, Google said it was moving beyond search and advertising into the business software market, starting with a set of Web programs for e-mail, scheduling and communications. It plans to add additional programs later.
The eBay partnership indicates that "Google continues to grow not only through rapid innovation, but also through partnerships with premier online properties," Oppenheimer & Co. analyst A. Sasa Zorovic wrote in a research note.
Financial terms for components of the deal involve revenue-sharing, but the companies did not disclose details.
EBay said it did not expect the agreement to have a material impact on its financial results in 2006 or 2007. Analysts said the deal was also unlikely to have a material impact on Google during that period.
EBay increasingly depends on paid search advertising to drive bidders to its auctions and sales. Its new pacts seek to make it easier for buyers to search for items for sale on eBay, while being careful not to offend sellers with competing ads.
Through its deal with Yahoo, eBay has already begun testing ads that appear when U.S. customers fail to locate what they want on an eBay auction search, eBay CEO Meg Whitman said.
The Google pact expands this to international sites.
If and when eBay sellers become more comfortable seeing ads alongside their listings, eBay plans to expand the number of pages where Yahoo or Google ads may appear, she said.
PHONING WEB CUSTOMER SERVICE
The companies said they will jointly offer "click-to-call" advertising using the instant message and Web phone-calling services of two companies -- eBay's globally popular Skype and Google's nascent Google Talk service.
Click-to-call is where advertising merges into e-commerce. It allows potential buyers to click on Web-phone ad links and talk directly to sellers or their representatives.
The technique is seen as a promising way to reach merchants or advertisers who may not have a Web site, or who rely on potential customers using Yellow Pages phone directories.
"The vast majority of businesses still serve customers via the phone," Whitman said in a joint interview with Google's CEO. "This is the online equivalent."
EBay has signed up more than 100 million users worldwide for its Skype message and Web phone-calling service.
EBay said it would soon offer Skype users the option to download the Google Toolbar, which has quick links to Google services, especially Web search. The two will explore making Skype and Google Talk work together for text chats and to help make users aware when users of the other service are online.
Copyright 2006 Reuters Limited.
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