Google, EBay Sign Ad Deal, Plan To Integrate Internet Telephony Services

Google and EBay on Monday unveiled a multi-year agreement that makes Google the exclusive provider of text-based advertising outside the United States, and extends both companies' Internet telephony services onto each other's platforms.

The deal is the latest alliance between major Internet companies as they look to increase the reach of their services and ad networks. But in trying to boost ad revenue, EBay is treading carefully in agreements with competitors who also become partners. While Google is the exclusive provider of ads outside the U.S., Yahoo has the same rights within the United States.

Financial terms in the latest agreement were not disclosed, but EBay and Google said in a joint statement that both initiatives involved revenue sharing. Such agreements can be lucrative. Google, for example, says it expects to pay News Corp. $900 million over the next three years in becoming the exclusive provider of advertising on the MySpace.com social network. The deal was announced this month.

Google and EBay plan to test the click-to-call and ad initiatives for several months beginning in early 2007. The specific components and timing of the actual implementation will vary by market, depending on test results, local dynamics and joint capabilities, the companies said.

The text-advertising deal applies to ads that would appear when an EBay shopper searches for an item or service that isn't available. In those cases, shoppers would get a page that provides Google-supplied links to other Web sites, EBay spokeswoman Catherine England said. In the future, the companies could expand the use of text advertising."It may evolve over time, but we're still on the early stages of testing," England said.

The same is true for the joint click-to-call service, which is geared toward online shoppers. Initially, visitors would be able to click on a link or icon within a product or service advertisement to initiate an Internet voice call to participating merchants in either company's respective sites, using Skype or Google Talk. The service is expected to be particularly attractive to merchants or advertisers who may not have a Web site, or who currently use local directories to reach potential customers.

In the near future, EBay plans to offer through Skype the option of downloading the Google Toolbar, to which a custom Skype button would be added for quick access to the service. The companies also plan to explore interoperability between Skype and Google Talk to enable text chat between shopper and merchant, or to see whether a merchant is available.

Google competes with EBay in online shopping and classified advertising. The search engine also has an online payment service called Checkout that competes with EBay's PayPal. Outside the U.S., however, Yahoo competes with EBay in China and other parts of Asia.

The EBay agreement is the latest of several big deals Google has signed recently. Besides News Corp., Google in December agreed to pay $1 billion for a stake in AOL, and to form an online advertising partnership with the portal. Besides expanding its reach as a Web advertising platform, Google also got access to AOL content, particularly its video services.In May, Dell agreed to preinstall in its computers Google's desktop search application and Web browser toolbar that links to Google's online search engine and other services.

Working hard to catch up with Google in the partner marathon is Microsoft. The software maker last week announced an exclusive deal to provide online advertising to fast-growing, online social network Facebook. Microsoft also has an online ad deal with A9.com, Amazon.com's search engine.