EBay to resume ads on Google, but rely on rivals

SAN FRANCISCO (Reuters) - EBay Inc. said on Friday the online auction leader plans to resume placing Web advertising through Google Inc., but that it would rely on alternative advertising services to a greater degree.

EBay is one of the biggest buyers of keyword ads on Google's leading pay-per-click advertising system, AdWords, using them to promote its online auctions. It canceled all Google ads 10 days ago in protest over the Web search company's bid to woo eBay customers to a rival payment system.

Hani Durzy, a spokesman for San Jose, California-based eBay, said his company later on Friday would begin advertising on Google, but at reduced levels than previously. EBay had been buying tens of millions of keyword ads on Google each year.

"I will tell you it will be in a much more limited way than it was before," Durzy told Reuters. "What we found is that we were not as dependent on AdWords as some people thought."

EBay owns PayPal, which, with 143 million accounts, is the world's most popular online payment service among merchants and consumers. Last year, Google introduced an alternative payment system called Google Checkout and has been seeking to woo eBay merchants to accept direct payments via the rival service.

Now eBay plans to rely to a greater degree of competing advertising systems from Yahoo Inc., Microsoft Corp.'s MSN, Time Warner Inc.'s AOL, and IAC/InterActiveCorp's Ask.com.

Google generates virtually all its billions in revenue from AdWords, which shows related ads alongside Web search results tied to the words a user types into Google's search service.

The growing rivalry between the two companies' payment services spilled over at eBay's annual conference for key merchants last week in Boston when eBay protested Google's plans to hold a competing party outside the conference hall.

Google was seeking to put pressure on eBay to accept its system on eBay auction sites. In response, eBay moved to eliminate all U.S. advertising on Google-affiliated sites. Amid the controversy, Google aborted its own promotional event.

Despite a broad sell-off in U.S. stocks -- the Dow Jones Industrial Average was off 1.3 percent -- shares of both eBay and Google rose on Nasdaq. EBay was up 2.2 percent at $31.81 while Google added 1.5 percent to $521.77. Yahoo was down 0.8 percent at $27.45.