AI Overview: Why eBay Is Adding More AI Advertising Tools for Sellers

Some of the updates are based on seller feedback, according to Alex Kazim, eBay’s head of advertising. As eBay has added more functionality to its advertising products, some sellers have found that the platform has become difficult to understand and use, making it difficult to know how to create campaigns and where to spend money. The updates follow other tests eBay has been doing over the past year that have included using generative AI to better personalize ads.

“Even the ones who are sophisticated are asking for a way to really automate this because (sellers) don’t have a lot of time for it,” Kazim told Digiday. “The second piece is the constant repetition at every seller event I’ve been to: How do I grow my business? They just wanted more information, more understanding of ways they could actually grow their business.”

For trending campaigns, eBay uses search terms to match ads based on relevant keywords, subcategories, or a buyer’s eBay purchase history. Kazim said eBay uses semantic understanding powered by large language models to analyze keywords to target, in addition to the keywords sellers have chosen for their campaigns. One example of a trending marketing trend is the video game “Fallout,” which recently gained popularity as a TV series on Prime Video: “Fallout has been around for a long time, so people have a lot of memorabilia related to the cold weather.”

The new platform is powered by several different AI models, Kazim noted. One, called BERT, analyzes similarities in titles. Another multimodal model can analyze both images and text to look for similarities. However, Kazim noted that the definition of “similar” can vary depending on the AI ​​model, which is why eBay tests different models when developing new features. One example he cited is when eBay’s platform examines a pair of Apple Air Pods to determine which items are similar to advertise with them.

“Sometimes it’s different Air Pods, sometimes it’s different headsets,” Kazim said. “Sometimes it’s something completely different or complementary, like an Air Pod case or something like that. So we look at that specific item and then we go through a bunch of different models to understand that this is what that user should actually see.”

Some of the new tools are particularly helpful for sellers creating promoted listings or priority campaigns if the seller wants to avoid eBay’s automated selections. LLMs are particularly good at spotting which items might be complementary and worth advertising next to each other, and eBay also uses behavioral data for additional signals.

The ability to buy ad campaigns based on trends could be particularly appealing to low-margin retailers trying to maximize return on investment, said Gartner analyst Mike Froggatt. As larger advertisers invest in e-commerce platforms, it could also put more pressure on smaller third-party sellers.

The evolution of search is also helping to diversify marketing options across the consumer’s shopping funnel. As platforms like Meta Advantage+ Shopping Campaigns and others build platforms that give advertisers fewer options, Froggatt also noticed that retail media networks are looking to give advertisers even more options.

“Whenever you’re dealing with bottom-of-funnel performance marketing, speed of decision-making around buying and optimization is going to be key,” Froggatt said. “The tools that eBay, Amazon and others are putting out there are designed to help their smaller sellers and make sure they stay competitive in that space.”

EBay is also using generative AI in other ways, such as to automatically generate product descriptions. Beyond ads, EBay is also testing something it calls “magic listing flow,” where sellers can take a photo and have an AI model create a title and aspects for the description. While some platforms, like Meta and Amazon, are implementing ways to create AI-generated campaign assets, Kazim said EBay is staying away from it for now.

According to eMarketer’s March forecast, the company’s advertising revenue will continue to grow steadily in the coming years and will amount to $651.4 million in 2024, $780.3 million in 2025 and $926.3 million in 2026.

In the first quarter of 2024, eBay’s third-party ad products generated $370 million, up 30% from a year ago. Traditional third-party display ads brought in less than $15 million, down 55% as part of the company’s plan to prioritize first-party ad products. Third-party ads now make up less than 4% of ad revenue, CEO Jamie Iannone said in a May earnings conference call. (The company’s ad product costs also rose $11 million in the first three months of the year, according to eBay’s first-quarter results.)

AI tools are key to improving results across e-commerce platforms and retail media networks, said Adam Skinner, managing director of unified retail media at Epsilon. “AI will enable faster decision-making and help brands operate more efficiently by improving reach and personalization for shoppers,” Skinner said. “…AI recommendations and the push for ease of activation can save brands time and increase sales.”

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1 and 0: Artificial Intelligence Research

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