Introduced in 2015, eBay's Promoted Listings service has become a cornerstone of their advertising strategy and the greater digital media landscape. In just Q4 of 2023, eBay generated 393M U.S. dollars in ad revenue, with 368M coming from promoted listings.
Promoted listings are proving to be an innovative way for retailers to fully leverage their visitor traffic without negatively impacting sales or user experience. The additional revenue generated from sponsored or promoted listings can empower businesses to reinvest in lower prices and product enhancements, gaining a competitive edge.
As the digital advertising landscape continues to evolve, promoted listings stand out as a crucial tool for retailers aiming to capture consumer attention and drive sales in an increasingly competitive market.
A promoted listing is an organic listing that is promoted or highlighted in some way, often by being listed at the top of certain search results. Promoted listings are also known as sponsored listings, sponsored or promoted products, and product listing ads.
Alternatively, a vendor could pay to promote their product in an email, on the site's homepage, within an in-app notification, on a product page, or anywhere else an e-retailer puts organic product listings. These "advertisers" are typically brands or sellers who already work with the retailer and who are paying to get more visibility for their products or services.
Promoted listings example
Let’s imagine you are an eBay seller who sells rings for $100. For an eBay search on "rings", your organic product result is #50, located near the bottom of the search results page. Using eBay's Promoted Listings product, you can pay $20 per day to appear in the first row for the same “rings” search. If this spend then results in, say, two incremental sales per day, you’ll come out on top after paying just $20 for $200 in new sales.
In this scenario, everybody benefits:
This example only highlights one seller and one phrase. According to an eBay report from Q4 of 2023, eBay’s total advertising offeringings generated $393M of revenue in Q4 2023, showcasing the impact of an engaged userbase.
It may be important to note here, that technically the "loser" would be sellers who are already organically high-up, but who see a sales dip when they are pushed down by a paying seller. In this case, they may pay to promote themselves back up, increasing revenue for eBay further and enabling market forces to determine what the true value of that placement is. Either way, eBay is driving new revenue, further engaging its sellers, and providing a good user experience to visitors.
There are five usual places that brands put promoted listings: search results, browsing results, the homepage, product pages, and e-mails.
Search results are a natural placement for promoted listings, with advertisers choosing what search terms they want to bid on (like Google's Adwords). Given there's an "intent to buy" when a user searches for a product on an eCommerce site, this placement is of high value.
For instance, as of publishing, the shoe brand Joomra currently pays Amazon to be the first result for a search of "mens running shoes". This is a wise move, as organically the first Joomra sneakers do not appear until result #29 on the second page. Without that paid placement, Joomra would likely have very few sales, if any, from people making that search.
Promoted listings can also be placed in specific category sections as someone is browsing the site. While not technically a search, category browsing demonstrates intent and can ensure relevant targeting. For a more in-depth look at how category ad units can appeal to advertisers, check out Flink’s success story here.
Many sites have an "Other Products You May Like" section throughout their product pages. There's no reason that vendors - whether competitors or complementing products - wouldn't find value promoting themselves in these slots.
Rather than promoting a single product, “Sponsored Brands” sections promote various items, boosting brand presence by showcasing a brand store or post more broadly. These ad units promote brand discovery, typically through static or video formats, and can be found above, alongside, or within browsing results.
Most eCommerce sites have drop-down menus for browsing by category. These menus offer highly-visible placements to promote product ads that are relevant to the category the user scrolls across.
A prominent placement on a site's homepage is a great way for brands to raise awareness and drive clicks for its products. Additionally, e-retailers can charge high premiums for this coveted spot.
Finally, incorporating promoted listings into emails can drive new revenue without disrupting the email experience. There's a sizable payoff for little work here. As an example, let's imagine this scenario:
You have 10M subscribers to your weekly email that has a 20% open rate. You use this email to feature products and have decided that in each email one of the eight products will be promoted. You speak with your vendors to see who's interested in paying for that spot.
The technical integration to launch a single promoted placement shouldn't take longer than a couple weeks, and a single person could spend just hours a week managing it. If your vendors agree to $10 for every one thousand opens, each week you can expect to make $20K:
Opens: 10M @ 20% open rate = 2M
Revenue: (2M / 1000) * $10 = $20,000
That's about $250K more revenue per year, nearly all profit, and requiring no additional hires.
Advertisers are drawn to promoted listings due to their potential for high rewards with minimal risk. Since promoted listings appear in high-traffic areas such as search results, homepages, and emails, they are likely to generate leads and enhance brand awareness. Generally, promoted listings do not require significant upfront costs and are non-labor-intensive -- platforms like Kevel further simplify the creation and management of promoted listings, eliminating the need for a complicated tech stack or a large, dedicated team.
Recent emphasis on measurement and performance metrics like incrementality and attribution also highlights advertisers’ growing desire to eliminate wasteful ad spend. Promoted listings excel in this regard by ensuring that ads are displayed in relevant contexts. When combined with effective targeting strategies, they help advertisers reach potential customers more effectively, reducing the likelihood of their budget being spent on uninterested audiences.
Promoted listings are generally sold either via a self-serve platform or direct sales. The best choice for a retailer boils down to how much control they want. For instance, marketplaces tend to offer self-serve platforms within their seller portal, making it easy for anyone to upload an item to sell, put in a credit card, and pay for extra promotion.
Other brands prefer handling advertisers manually, with a small team dedicated to securing deals and managing campaigns using an internal UI. This offers more control over who is advertising, how they price and invoice, what spots they sell, and so on.
For example, Patagonia could work with REI to create Patagonia promoted listings to be showcased in relevant searches, on the homepage, and in emails. Given the potential size of the deal, it may make more sense for an internal REI business team to manage the campaign themselves, so as to provide a more hands-on experience.
The large promoted listings platforms - including eBay's, Amazon's, and Etsy's - were all built in-house and took years to launch. The time required to create promoted listings isn't minimal, as it entails building ad pacing tools, revenue optimization algorithms, reporting features, forecasting tools, and more - not to mention having to deal with server costs as one scales, IAB certifications, GDPR compliance tools, and so on.
There are some widget-based ad networks that enable promoted listings, such as PromoteIQ (acquired by Microsoft in 2019) and Criteo. These options allow retailers to outsource the tech and vendor relationships in order to launch faster. The trade-offs, however, include losing the flexibility to design a robust platform, having to deal with page-slowing JavaScript tags, lower revenue due to rev-share models, and an inability to build white-labeled self-serve platforms.
For retailers that want to own their promoted listings tech but don't want to wait years to launch, Kevel offers API access to a suite of ad serving tools that make it possible to launch a promoted listings product in as little as 14 days.
Successful server-side ad programs can drive meaningful revenue, enabling brands to offer lower prices, capture market share, and build organic growth.
Whether or not the investment proves enticing will depend on the retailer, but, at the very least, promoted listings are a low-risk, high-return ad unit that enables brands to drive new revenue without sacrificing user experience and while also driving incremental advertiser revenue.
For more info on retail media, visit our quick guide here or download our eBook on Launching Your Own Retail Media Network. Interested in learning how Kevel can help you launch promoted listings that advertisers will love? Get in touch today.
