Community key to ebay’s bid to maintain the magic

Online auction site eBay is to renew its focus on how it relates to consumers following last week’s appointment of integrated agency Albion to its 10m UK creative account.

But observers believe it needs to take radical steps to keep up people’s interest in the site following the first flush of excitement they enjoy when buying goods from the world’s foremost secondhand goods retailer.

There are also question marks over eBay Inc’s business strategy and how it will exploit the disparate assemblage of websites and technology companies it has gobbled up over recent years.

Founded in 1995 in California by Pierre Omidyar and initially called AuctionWeb, eBay survived the dot-com boom-and-bust in the late 1990s and has grown to a $6bn (3bn) business with its global ebay.com site and over 20 localised sites. The site became known as eBay before its 1998 float, named after Echo Bay Technology Group, Omidyar’s consulting business.

Global experience
Now the “world’s online marketplace” has huge awareness. “Who hasn’t heard of eBay?” asks UK marketing director Olivier Van Calster. But it’s not just awareness, he says. “Brand perception among consumers is very positive. Consumers have real resonance with the brand across the UK and the globe.”

Van Calster says the eBay brand is moulded by its users/ “It is not shaped by the company but by the people who use it. This was not appreciated by many ad agencies we spoke to.”

Albion will handle creative work across all media and while it admits to lacking experience in TV campaigns, so does eBay.co.uk. It first advertised on TV in 2004, having built its online user base via word of mouth and online advertising, chiefly banner ads and search.

However, above-the-line advertising will be a significant tranche of marcoms and it will continue to use the coloured “logo people” characters. First used late last year as part of eBay’s Christmas ad push, Van Calster says: “Research shows great enthusiasm among consumers. We have been delighted with the cut-through they achieved.” He adds that the logo people convey the variety of users and experiences on the site.

Interbrand UK chief executive Rune Gustafson disagrees: “The characters used in the Christmas campaign were witty, but rather childish and the humour was not followed through online. They are great visually, but this is not communicated on the site. It’s right that the site is functional and secure, but it is rather dull – unlike the image portrayed in its advertising. EBay is a strong brand but does it actually engage?”

He adds that eBay struggles to generate a buzz among consumers, but admits it’s a hard proposition to market. “People use it in phases. Once the thrill of the chase is over, it struggles to encourage greater use. Retailers are able to generate interest with new lines – eBay does not have that ability,” he says.

Beyond the Car boot
Jason Goodman, managing director of Albion, says the agency’s job is to re-engage users. “I think eBay would be the first to admit it’s an ongoing challenge to excite people about the proposition. There is a perception that eBay is little more than a virtual car boot sale. We aim to convey the truth about the brand and truly engage consumers. It’s not about portraying glamour and glitz around the brand, rather it’s about talking to consumers in a compelling way.”

The auction site’s user base has grown organically, but from 1999, as other dot-com businesses were suffering, eBay Inc – the broader parent company behind the eBay online store – shored up its defences and embarked on a bold acquisition strategy. In 1998 it swallowed local US rival Up4sale.com, buying online payment business Billpoint and German auction site Alando the following year.

The spending spree slowed but then kicked in again in 2002, when it bought PayPal for $1.5bn stock and folded Billpoint into the business. The following year saw moves into China, then from 2004 to 2006, eBay gobbled up local Dutch auction site Marktplaats.nl and a local Korean site, a 25% stake in Craigslist and bought a range of classified listings sites, including Rent.com, GumTree. com and Shopping.com. Such acquisitions and investments would appear a natural fit – not so the 2005 acquisition of Skype, the internet telephony company (using voice over internet protocol or VoiP). Many observers wonder how these businesses really fit together and whether there is cohesion in its broader strategy.

E-commerce sites and classified listings are one thing, but online telecoms was a surprise move – as was last week’s $75m acquisition of StumbleUpon, the site that puts users in touch with other people and social search sites based on other users’ recommendations.

Insiders say there are no immediate plans to integrate the separate arms of the business, but some speculate that the long-term strategy could be to bring the constituent parts together. This appears to be borne out by eBay’s determination to focus on its community of users. Van Calster says eBay’s logo people are intended to further convey the community aspect of the site.

Gustafson argues that the brand will have to work on the concept as the logo people have failed to portray the sense of community to which Van Calster refers/ “The brand has the potential to appeal across all age groups because it is actually offer-led, rather than being brand led. The whole brand strategy has to talk to consumers and engage them.”

Pitch tension
Agency insiders say there was frustration at the pitch stage as eBay was adamant it was to retain the logo people, while prospective agencies sought to introduce a different mechanic.

But Van Calster and Goodman both allude to a strategy that will focus on the community and use new and emerging technologies. “We have a tradition of innovation and will look at how we can use new technologies to connect with our users,” says Van Calster. He says there will be an emphasis on integrated marketing using members to convey the benefits of the site and the eBay experience. It has a new desktop tool – widget – in beta, which allows users to check auctions without logging on to the site. It has also struck a deal with Vodafone to launch a mobile concept. Van Calster rules out adopting user-generated content in the immediate future – but the signs are there.

StumbleUpon’s recommendation feature could be used to help eBay’s 200 million-plus users to find other auctions or products that may interest them. They could also communicate through the site and Skype technology could be tied in. The company will not admit to such plans, but there appears to be a natural fit.

Goodman says eBay has “every right to lead the way”, but some observers say it is late to the community party and should have adopted such an approach sooner. However, he says eBay has “a clear vision for its approach to marketing that’s at the cutting edge and across all media channels, with digital and community at its core”.

But many remain unconvinced, saying eBay Inc’s acquisitions are erratic and that it has failed to integrate businesses successfully into the auction site – namely Skype.

But others say eBay has the capabilities to truly connect consumers across its own site and via sibling companies – and such a strategy could pay huge dividends. If we’re not all fed up with communities by then.