Merchants will only pay if ads generate actual sales.
eBay is breaking the standard norms of advertising by launching a new service, ‘Promoted Listings’, where merchants will only have to pay for the advertisements which lead to actual sales.
Merchants will have to specify the percentage of the product sale price they are willing to pay to run the ad on the e-commerce giant’s website.
eBay will not consider the merchant’s reputation or the popularity of the product, with those paying more landing the most prominent ads.
The cost-per-sale (CPS) model is designed to give guaranteed effectiveness of ads to shoppers, and it will put eBay accountable for delivering the right traffic and placement to its sellers.
Traditionally, companies including Google depend on cost-per-click ads where merchants have to pay for each click on the advertisement even if it does not convert into a lead.
Most companies do not adopt the CPS approach, because it involves the risk of running ads that will not generate any revenue for the website.
However, the new model is expected to be beneficial for smaller merchants, as they will not have to focus on the effectiveness of ads and lose money if it does not work.
eBay advertising vice president Alex Linde said: "This is just the beginning as eBay continues to build brands for the sellers on our site, and offers valuable new tools to drive traffic and help gain visibility for their businesses.
"We anticipate that the promoted listings service will allow sellers, both big and small, to connect with buyers around the world in new ways."