Google SEO change and eBay
Earlier in this series, we looked at the two main reasons why eBay Inc’s (EBAY) revenue growth slowed in the last two quarters. The first reason was the major cyberattack on eBay’s database. The second reason for the growth slow-down was Google Inc’s (GOOG)(GOOGL) search engine optimization, or SEO, change.
During the 3Q14 earnings call, eBay’s management asserted that the company gets most of its traffic organically. Meanwhile, management acknowledged that although search engines are but small factors driving its traffic, they’re important sources, and are responsible for bringing new users to eBay’s platform. For more on this topic, read Why Google has been able to maintain its search market leadership.
Google’s algorithm change in May of this year clearly affected eBay. As the chart above shows, the number of active buyers on eBay’s site declined during the last two quarters.
eBay needs to change the way it structures its data
eBay’s management said that despite its 8 million product listings, the largest collection online, the company’s data is largely unstructured. As a result, it’s more challenging for search engines to index its inventory. This is the reason why the company was affected by the SEO change. eBay is now working to make its data more structured, but this exercise will take time.
Catering to the SEO change is important for eBay to boost user growth on its platform. The quicker it does that, the better it will be for exchange-traded funds such as the PowerShares Nasdaq Internet Portfolio (PNQI) and the First Trust DJ Internet Index Fund (FDN), both of which have high exposure to eBay.