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The Honolulu Advertiser
Posted on: Tuesday, August 29, 2006

Google, eBay are now a team

By Rachel Konrad
Associated Press

SAN FRANCISCO — If you're in the market for a nanny or a plumber close to home, chances are you'll consult the Yellow Pages or ask friends for recommendations. You might even check community sites like Craigslist or Angie's List.

Google Inc. and eBay Inc. would rather you use them. The two prominent Internet companies announced an advertising partnership yesterday that aims to put buyers in touch with a wider variety of sellers, such as the neighborhood exterminator, math tutor or roofer.

Under the arrangement, Google would provide search results whenever an eBay member typed in a search term that failed to find any matches on eBay's vast auction site.

Although eBay lists millions of physical, shippable goods, such as antique airplanes and used cloth diapers, the company has long struggled to sign up service providers — people who sell their labor or intellect, not their physical wares.

Nearly two years ago, eBay purchased a 25 percent stake in Craigslist to study how the world's most popular online auction company could learn from the bare-bones community site, which has a thriving services category and sellers ranging from professional escorts to freelance software engineers.

But eBay hasn't been able to attract similar numbers of professionals to its site. For example, eBay contains more than 6,500 items related to scuba diving. But a search yesterday for "scuba diving lessons" found no matches.

The new deal would change that. Instead of nothing, eBay visitors would get text ads from Google. Although eBay risks sending visitors elsewhere, it ensures consumers that by going to eBay for nearly anything, they'd find a seller somewhere.

Financial terms of the deal were not released, but both companies acknowledge that it includes revenue sharing, so eBay would also likely get a fee for referring people to other sites.

The service, which will be rolled out in early 2007 to consumers outside of the United States, is similar to a partnership eBay has with Yahoo to provide listings domestically. The companies haven't disclosed many details of how they'll localize the search results, but that's technologically straightforward — particularly with eBay, which asks users to register with an address.

"I could see the local hardware stores, or maybe caterers, noticing something like this," said David M. Garrity, director of research for Dinosaur Securities. "Finally the Internet would work for them."

Until recently, few locally owned, small-scale businesses such as the corner bakery or snow-plow operator bothered creating Web sites. They relied on word-of-mouth advertising, the weekly church bulletin or hand-scrawled flier stapled to the library cork board.

But e-commerce companies such as eBay and Amazon.com Inc. have made it relatively affordable for merchants to build custom Web sites, while search engines let them target people interested in a specialized product.

The deal could make it easier for local merchants to compete against "category killers" such as Home Depot Inc., Lowe's Cos. and other dominant retailers. Eventually, eBay users could rank local merchants as part of its popular feedback system.