Insider Chatter by Donna Bogatin

eBay vs. Craigslist? Who needs Google?

CEO Meg Whitman revealed eBay’s immediate plans for building out its new U.S. classifieds play, Kijiji, and where it stands on its Google search advertising spend in her report to Wall Street yesterday.

Bottom line? Kijiji is NOT just another Craigslist and Google is NOT the only traffic acquisition game in town, so believes eBay.

Whitman on Kijiji and Craigslist:

On the last day of the quarter, we launched Kijiji here in the U.S. to buyers and sellers in 220 cities in all 50 states. We believe our success with Kijiji outside of the U.S. is a great indicator of what can be achieved here and expands the buying and selling options we provide to people around the country.

We are interested in building a robust classifieds business in the United States. Because of our success internationally, we actually think it is the right platform on which to expand into the U.S. and serve classifieds communities in the U.S. with a new kind of offering.

Interestingly enough, we think actually that the U.S. market is large enough and diverse enough to support a number of different players in this area. This is a very fragmented market. Our plan is to use the U.S. classified business, it is really quite a differentiated offering versus craigslist, with a slightly different target market, and see what happens. If we have anywhere near the success we have had with Kijiji outside the United States, I think we will be quite pleased. We may learn some things that help the eBay U.S., but this is actually a classifieds play in the U.S.

We enjoy a good relationship with craigslist and we have been an admirer of their company for a long time. We don’t expect this launch to impact our investment in craigslist. We plan to maintain our minority equity stake.

With regard to investment in Kijiji, obviously we’ve made some investments in the site. But one of the great things about having a global platform is we can actually launch in 220 cities and 50 states at a relatively low cost using the investment that we have made in the Kijiji platform overseas. So it is one of those times when scale actually helps speed.

So we are going to largely grow that organically. We do a little Internet marketing, we do a little direct marketing, but particularly in 2007 and 2008, we want to see how fast we can grow this organically.

Whitman and CFO Bob Swan on Google:

Our growing advertising business, our partnerships with Yahoo! and Google are going well. We are bullish about the long-term potential of this monetization mechanism.

Our advertising business is starting to gain some significant momentum. Overall, advertising and other revenue was up 77% versus the prior year, increasing from 3.1% of total marketplaces revenue last quarter to 4.2% this quarter. This acceleration was driven primarily by the launch of advertising in our international eBay businesses. We’re pleased with the progress we’re making and believe that advertising complements our existing transaction-based platform, allowing us to capitalize on our significant traffic.

Late in the quarter we ran an experiment to see what would happen if we were to change our allocation of Internet marketing between our largest providers. We pulled back from Google, reallocated to AOL, Ask Jeeves and Yahoo! in particular. We learned a lot from this test that will actually drive our go-forward Internet marketing spend. It has to do with return on investment, where we can get the most leverage.

We have gone back to spending some money on Google. We will continue to reallocate not only between IM engines as we go forward on particular words, but also, frankly, we are reevaluating our spend between offline and online.

So a great test that we did. I think we learned a lot from it. I think we are going to be even more efficient than we have been in the past in terms of the efficacy of our IM spend. By the way, it had no impact at all on the results for the quarter, because the money we largely were spending on Google we moved to other partners and saw actually great ROI.

Long live coopetition? SEE: Google’s Big, Bad Risk: Coopetition

ALSO Read my exclusive interviews: Oodle CEO Q & A on eBay, Kijiji & Craigslist Classifieds and Craigslist Q & A: Classifieds Community NO ‘Walled Garden’

PLUS: TechCrunch: Hot, or Not, for Silicon Valley?

CONTACT DONNA BOGATIN

Every American is born with the unalienable right to the “pursuit of happiness.” Contrary to popular belief, however, PURSUIT is the operative word, NOT HAPPINESS.

Nevertheless, conventional wisdom is that that we are all entitled to achieve the American dream, upon demand. After all, “a dollar and a dream” is all it takes to reap lottery millions.

In the Web 2.0 start-up world, all it takes is “two weeks and $700 bucks” for cool app glory, as Digg’s Kevin Rose can attest to:

I was sitting around thinking about how this would play out. My background in school is in computer science. I wrote a scoping document to a friend, who is a developer. The friend said it would take two or three weeks to create and cost 700 bucks, so I said, ‘Let’s go for it.’

Two or three whole weeks? How old school! The folks behind the TechStars startup on a shoestring incubator believe there is no need to wait so long to get a startup up: “Startup Weekend, Let’s create a startup!” 

What happens when 70 cool techies huddle in Boulder, Colorado to “create something beautiful over one jam packed weekend”? Cool ideas get bantered around, a lot, becasue “the geeks shall inherit the earth.”

What does TechStars do? “We help startups start.” Not exactly a long view on entrepreneurial value creation.

What does it take to “create a startup in a weekend”? Seven functions are apparently crucial:

Developer
PR
Whatever, I make it happen
User Experience
Designer
Legal
Cook

Surprisingly, Yoga Instructor did not make the list, even though yoga is part of the Startup Weekend agenda.

Truth be told, Startup Weekend actually required more than a weekend; Brainstorming for startup ideas took place online prior to the on-site intensive.

Did Startup Weekend participants take advantage of pre-planning time to do in-depth plans for the “next big thing”?

Market research perhaps? Census data review? Focus groups? NO indication of any such solid business planning development tools deployed.

From where did participants draw their startup inspirations then? From themselves, and their four year olds.

The first startup idea posted prior to the weekend, by David Duey, who hopes to help his infant browse better:

Googlodeon : My four year old son plays online kiddie games and he loves to browse the various toy sites. There’s only one problem, he can’t read or spell. There must be a good way to search without requiring people to be able to read and write.

Nick Woodward hates “having to pay the service charge to Ticketmaster” and wants to enable “stakeholders to possibly bypass the promotions company and/or the ticketing company.”

Tyler has “just graduated college” and knows “the pain of purchasing textbooks.” His “value creation” startup proposal:

Why not build a site where students can list the classes they took, with what teachers, and rate whether or not you should buy the book (buy/don’t buy). Users would also enter their schedule for the following semester and then get the privilege of students knowledge that have already taken the classes. Now instead of buying 5 textbooks for $500 and only using 3 I will just buy three for $300. The site is linked to Amazon to receive affiliate fees from students purchasing their textbooks from the site. The student saves $200 and the site collects $30 in affiliate fees. Now that is value creation! The problem of high priced college textbooks has been targeted for years with online book swaps, but never has anyone taken on the problem from this angle.

Joe Scharf weighed in with the WINNING formula for a SERVICE that TARGETS STARTUP WEEKEND ITSELF!

The Idea: Vevo.com as in Vote Early, Vote Often.

Whereas twitter asks “what are you doing” in 140 chars or less, VEVO asks “what are you deciding?”

The idea came from thinking about the Startup Weekend model. To eliminate the need for countless number of rules and to keep the Startup Weekend model self-organizing, we will need to rely on a democratic voting process to guide the course of the group’s action. I imagine we’ll be making a lot of decisions during the weekend through group votes. We will want a method to make these decisions quickly so we can focus more on developing and less on decision “overhead”

VEVO facilitates this process by allowing decisions to be made by a group through a quick, efficient, and accurate democratic voting process.

TechCrunch commenters on the not so winning innovation:

John: “I smell a digg clone with a facebook app”

Don Wilson: “70 people to make a polling system. Wow. What a waste of talent.”

Mike Trotzke: “wow, I designed a tool like this on a plane ride to Cali a few weeks ago. Same idea, but I have’nt had time to finish it up. I even picked up ‘DecideAlready.com’ to publish it to.”

anonymous: “check out top20network.com, they have a similar tool, but gotta have a .edu email address from a top 20 school to get in, surely someone from those 70 people do, right?”

dag: This is silly, and has a whiff of San Jose, circa 1999. Hey, I know! Why don’t we sell pets online? You can FedEx a labradoodle, right?

Startup Weekend’s startup monetization strategy is short on innovation as well. “How to make money,” according to Scharf:

1. See twitter.com
2. 37signals model of varying service levels based on # of groups that a moderator can form, # of decisions per month, security, archiving of vote outcomes, notarization of votes
3. Advertising (last resort)
4. Maybe Diebold will be interested in acquiring us

TechStars ought to have had a required StartUp Weekend reading list.

My top pick: “Capitalism, Socialism and Democracy” by Joseph Schumpeter, discussing radical innovation and creative destruction to spur entrepreneurial competition which:

Commands a decisive cost or qualiy advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.

OR, the type of meaningful entrepreneurial competition that requires a tad more effort than a cool, yoga-pizza-beer infused techie bonding weekend in the Colorado foothhills.

ALSO: Facebook Generation: Entrepreneurs or Hackers? and Google Buys Postini PLUS 500 million Email Secrets

CONTACT DONNA BOGATIN

eBay Kijiji aims to impact the entire online classifieds market in the U.S., not just Craigslist.

Classifieds aggregator Oodle wants to aggregate everyone’s online classifieds listings, including Kijiji and Craigslist.

WHAT IS OODLE’S REACTION TO EBAY KIJIJI LAUNCHING IN THE UNITED STATES?

I asked Oodle CEO Craig Donato to find out. Below is our Q & A.

DB: Do you already work with Kijiji outside of the U.S.? For example, Kijiji is very strong in Canada and Oodle just launched in Canada.

DONATO: In the U.K., Oodle includes Gumtree listings, which is the local Kijiji brand, and Kijiji in Canada. We’re hopeful that we can work with them in the U.S. but we haven’t yet started to do so.

DB: How does Kijiji launching in the U.S. impact Oodle?

DONATO: It’s great for consumers and it’s great for Oodle. Providing consumers with choice is alays a good thing. And consumers are increasingly getting more options to post free classifieds listings. Obviously as consumers use more and different marjetplaces, Oodle becomes more useful. It’s also important to note that consumers don’t publish listings directly into Oodle. As a search engine, it is our goal to partner with all the classifieds marketplaces on the Internet, big and small, local and national.

DB: Oodle seeks to be the leading classifieds site in the U.S. Oodlefieds site in the U.S. Oodle aggregates 75, 000 sources for its 20 million listings monthly. Craigslist alone represents the same number of listings monthly. Can any company, even eBay, dethrone Craigslist?

DONATO: Yes, we’re already doing a great job without Craiglsist. First off, the market for Classifieds listings is more fragmented than most people realize. Consumers can usually find more listings through Oodle than through Craigslist. In certain metros, where Craigslist is very popular, the numbers are closer, especially in the merchandise category, where they are very strong. But even when you look across the Bay Area, Craigslist’s bigggest market, oodle has more than twice the number of car and apartment listings.

Second, Oodle provides a wide range of tools–alerts, pricing guides, fraud detection–to help consumers find the reigh lsitings in the right marketplace.

With repsect to Kijiji, I do believe ebay can be successful. Unlike an auction, where you have to choose one venue to list your item, it makes sense for consumers to publish thier clasifieds in multiple places, epsecially ehen they are easy to use and free. So there’s no reason for consumers to not publish their lsitings in both Kijiji and Craigslist.

DB: Can Oodle be a leader in the classifieds industry without access to Craigslist listings? Is Craigslist a “walled garden”?

DONATO: Oodle can be a leader by best serving the needs of consumers trying to buy, or rent, things through classifieds. Consumers find great deals though classifieds, but its typically a painful and time consuming experience. We can lead by providing great tools that simplify the shopping experience and by partnering with clasified marketplaces across the Internet.

For example, when you’re looking for a used car, it’s great to go to one place to help you see al the local listings in your area. Our pricing guides help you figure out what’s a good price to pay and how often deals at the price pop up; If you tell Oodle what model you’re looking for, we’ll email you when one is posted.

Craigslist a walled garden? Yes, I guess you could say trhey are acting like one. They are putting up a wall between the listings that consumers publish in their marketplace and those consumers that may want to use a search engine or other tool to help them shop with online classifieds.

DB: Does eBay entering the U.S. classifieds marketplace change the Oodle business plan?

DONATO: NO. Indeed, we’ve been surprised to see so few companies come out and offer free classifieds. We’ve alwys believed that a vibrant ecosystem of classifieds marketplaces will serve a variety of local and Internet communities.

Search is generally recognized as playing a useful role to both consumers and ecommerce sites on the Internet today. The need for search in classifieds is even more pronounced.

With classifieds, you’re looking for one unique thing, such as that dream apartment, that perfect job, that disappears when someone else buys it, so classifieds need to be very timely. Also, classifieds listings tend to be poorly described with lots of unstructured data, so they are hard to search.

Classiifeds is very diferent than say searching for a specific Olympus camarea that is mainly about securing the best price. Consumers benefit as competing classifieds marketplaces innovate.

Thanks Craig!

For more exclusive Insider Chatter classifieds CEO interviews, see: Oodle CEO: Classifieds are Local, and Social and Craigslist Q & A: Classifieds Community NO ‘Walled Garden’ and Craigslist’s Craig Newmark: ‘My life is a sitcom’

PLUS: Backfence.com and Google: Money Can’t Buy Local Love

CONTACT DONNA BOGATIN

UPDATE:  eBay Trumps Google: Is Viacom Next?

What is the REAL moral of the Google Chekout vs. eBay PayPal drama unfolding on this very eve of eBay’s annual party for itself? Google is at risk, from coopetition, big time.

Google has just retracted its invitation to eBay sellers to party (while dissing eBay) together:

eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity. After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference. Google is constantly reaching out to new users and sellers, and we are available to privately discuss any matters of concern with individuals as they relate to Google products. Interested parties may contact us.

For background see: Google Turns eBay Party Crasher.

Where does Google stand now? The real story in this not so celebratory tale is much bigger than eBay vs. Google (although that is quite big in and of itself).

What is at stake is Google’s entire raison d’etre, REALLY. Google has a big risk, it is a risk unique to Google, and it is a world wide risk.

The inexorable Google risk is the inevitable conflicts that Google’s real desire to at once 1) own all of the world’s content (without paying for it), 2) control all of the world’s advertising, 3) dominate the world’s computing platforms, 4) process all the world’s payments…breeds.

CEO Eric Schmidt on his worldwide domination ambitions:

We said we are in the search business, so we need all of the information. We want to partner with people to get information so our search users can see it.

We’re also in the advertising business, and we’d like to provide advertising services to people who have their own proprietary content. So depending on where we are in that spectrum, we either do an advertising deal or a content deal or a hybrid deal.

But ultimately our goal at Google is to have the strongest advertising network and all the world’s information, that’s part of our mission.

AND, that was BEFORE, the newly updated “Search, Ads & Apps” Google mission; i.e., Microsoft “killer” Google Gears!

Google does not merely want to have its cake and eat it too, it wants to control and make money off of every iota of the cake’s life cycle: 

Google Scholar: Cake history
Google Apps: Recipe writing
Google Search: Vendor sourcing
Google Gmail: Factory communication
Google News: Union troubles
Google AdWords: Cake contest
Google AdSense: Website leverage
Google Checkout: Cake sales
Google Maps: Cake retail
Google’s YouTube: Cake video…

Every single man, woman and child, is a Google target user and/or partner and/or advertiser and every single school, government, organization and business is a Google target user and/or partner and/or advertiser.

Is such a scenario really tenable, all over the world, in every market? NO, as today’s Google vs. eBay fiasco undercores.

Google’s heretofore (almost) unblemished track record in exploiting its monopoly like position via coopetition to its for very high profit advantage is being tested, big time. The inherent, unsurmontable conflicts of interest the Google world domination mission yields have been exposed.

Google’s big, bad risk is that its Googley modus operandi is not sustainable. For (big) example, Google can NOT enjoy at once eBay’s (very) large AdWords spend while at the same time seek to undermine customer eBay for the benefit of Google’s own Checkout.

UPDATE: eBay Trumps Google: Is Viacom Next?

CONTACT DONNA BOGATIN

UPDATE: eBay Trumps Google: Is Viacom Next?

UPDATE 1: As I forecast earlier this morning, eBay is not taking Google’s Checkout driven “outreach” to eBay power sellers (see story below) lightly.

Hani Durzi, eBay: “We are disppointed that Google has chosen this time to distract from our annual event that gives online sellers a chance to learn how to grow their businesses in eBay and in other channels. It’s not the kind of activity one partner normally does with another.”

How disappointed is eBay with Google? eBay has “pulled all its paid search ads from Google’s ad network in the U.S.”

Google CEO Eric Schmidt underscored “how much we value eBay as a partner,” in announcing Google as the “exclusive text-based advertising provider for eBay outside the United States” last year.

Why then is he now risking devaluiing Google goodwill with eBay, in the name of Google Checkout?

it is eBay’s annual time to shine at its eBay Live! power seller event set to kick-off in Boston Thursday, but Google, apparently, is set to rain on eBay’s Live! parade.

While eBay CEO Meg Whitman will be rallying the eBay faifhtful, keynoting at 6pm before thousands of eBay community members, Google will be readying its own eBay rally, an anti-eBay one.

Below is the Google invitation to top eBay sellers to join in a Googley (free drinks & free massage) “revolt” against the company which drives their businesses, eBay:

LET FREEDOM RING: Join us for a celebration of your freedom and your rights to use Google Checkout. Follow to the freedom trail to the Old South Meeting House, where revolutionaries launched the Boston Tea Party and where eBay sellers will have a party of their own.

eBay seller party of their own? NO, sponsored by eBay competitor cum partner Google, rendezvous at the Google bus, parked right smack in front of eBay Live! upon the conclusion of Meg’s speech to her eBay troops.

Google may spin a witty Boston Tea Party game, but by unleashing its Checkout fire straight at the heart of eBay, it may ultimately regret shooting itself in its own not so ringing cash registers.

Who needs Google Checkout anyway, eBay sellers, or others?

Why is Google making a (big) issue out of no Google Checkout, at eBay? After all, Google Checkout is a perpetual drain on the Google bottom line.

Lack of customer traction and lackluster merchant support has led Google to keep Checkout afloat with ongoing mult-millions of dollars worth of subsidies, to retailers and consumers alike. Wall Street has even given up on looking for any Checkout love on the Google balance sheet.

Where is Google Checkout? No where to be found in a search for “books” at Google.com, even though major book sellers are accounted for with Google AdWords. Google also gives its own Google Books number one Universal Search love in its “natural” SERP.

In picking a fight with eBay over one of the least “loved” Google products, is Google fighting the wrong “revolution”?

ADDITIONAL UPDATE: Google’s Big, Bad Risk: Coopetition and eBay Trumps Google: Is Viacom Next?

Yahoo is trying its Panamanian darndest to best Google at search.

Nevertheless, the Yahoo strength continues to be “establishing the Internet’s most valuable audience through deep and engaged relationships,” as CEO Terry Semel underscores every three months to Wall Street in his earnings calls.

What is the “Future of Search Marketing” from Yahoo’s point of view, then? It resides in particular with the “Consumer 2.0,” not necessarily the “Searcher,” as suggested by Ron Belanger, VP of Agency Development at Yahoo, presentation at the Future of Online Advertising (FOOA) conference Thursday in New York City.

On the topic of Search Marketing, Belanger showcased above all Yahoo’s Web 2.0 “collaboration & sharing” tools!

Belanger began his talk, headlined “Understanding Consumer 2.0,” by signaling the importance of focusing on the “people conducting the searches,” rather than the search mechanics themselves.

Who are these people? With a half billion users world wide, all use the Internet differently, Belanger said. How then, can messages be catered to individuals, to get their attention? Yahoo wants to “empower” Consumer 2.0 “choice,” in a scalable way.

Because Consumer 2.0 is “stressed-out, sleep deprived, over worked and over whelmed,” there is less available time to physically reach them and it is harder to reach them emotionally, Belanger indicated. There IS hope, though.

Consumer 2.0 is “addicted to leisure”; If marketing messages are “entertaining, fun and relevant,” they can succeed, Belanger underscored, when aimed at the “passion points” of “community participants.”

Participation Marketing, according to Yahoo:

Identify your best customers,
Listen to them,
Collaborate with them,
Give them tools to share.

Above all though, “Hips Don’t Lie!” Belanger presented a case study on Yahoo’s “participation marketing” program for Shakira’s album.

Yahoo reached out across its Consumer 2.0 platforms to target “communities of passion” around Shakira–70 fan groups, 120,000 images, 100 customized fan sations–with a pitch to start shaking those hips!

Belanger showed a video of myriad Consumers 2.0 that took Yahoo up on its offer and submitted their own (Yahoo) clip-culture videos of themselves shaking their hips like Shakira. Yahoo received more than 10,000 user video submissions and the Yahoo remix “was our number one most downloaded video,” Belanger said.

Moreover, Yahoo helped extend the life of the hit single, he proudly added. In other words, those hips kept shaking!

CONTACT DONNA BOGATIN