Yahoo + eBay Tie the Knot!
If you're coming *BACK* to this post looking for links, they - and more - are at the bottom.

In brief, here's the shape of this post, which follows the details of the new Yahoo eBay deal:

Yahoo: sole provider of graphic advertising to 75 million eBay users.
PayPal: become Yahoo wallet
cobranded eBay toolbar for 4 million users
click to call exploration
What happened vs. what JP Morgan Suggested
What this means for Google and MSN

Yahoo: sole provider of graphic advertising to 75 million eBay users.
eBay can monetize all their window shoppers a little more effectively this way. I'm not familiar enough with either entity to say what these ads are going to look like, though they're more likely to be for TV shows and movies and what-not... or possibly for Yahoo search marketing.

I'm eager to see what the eBay seller community makes of the deal on this one.

This is a money-making move, and, by cutting MSN and Google out both eBay and Yahoo have solidified their positions.

PayPal: become Yahoo wallet
I don't know wallet technologies, so I'm not sure what the advantages of PayPal are over whatever Yahoo had before. And I can't think of what the advantages are to Yahoo of using PayPal - is it ease of transitioning eBay users into YSM customers? I think I'm missing a piece of the puzzle on this one.

Google's been sniffing up eBay's tree with Wallet (still vapor after a year...) and Base, so for eBay to extend their strong wallet technologies to Yahoo we may see something significant in mobile payment emerge.

Yahoo's strong relationship with SMBs and mentions of using PayPal as a payment processor for Yahoo's WebServices makes me think this is mostly a straight replacement kind of thing.

Watch for PayPal to morph into some interesting business models in '07 though, especially if PayPal can do micropayments profitably. Wag that long tail biaaatch!

cobranded eBay toolbar
The eBay toolbar, used by 4 million eBayers, will now feature Yahoo web search. The search section of the eBay toolbar write up doesn't specify who provided websearch before, or if websearch was even an option.

So... Yahoo will provide search for eBay's site? This is an interesting development because a) Yahoo bought Alta Vista, the search engine built by Louis Monier. Louis Monier built eBay's search up until about a year ago, when he went to work for Google.

So if Yahoo's now searching eBay this means that they're integrating into Monier's existing system.

My suspicion is more that Yahoo will provide WEB search. Though this is not stated clearly that I've seen.

Also, MarketWatch notes Yahoo will "supply sponsored search for complementary products on some eBay.com search results in the U.S."

click to call exploration
Skype, VOIP, Mobile, PayPal. Something very interesting is going to come swirling out of this piece of the deal. I haven't been following Yahoo in the VOIP space, though eBay bought Skype not too long ago. Monetizing business phone calls is gold, and something could emerge in this - given Yahoo's growing local SMB strength - that gives Yellow Pages a stiff kick in the nuggets.

Or not. Just some ramblings on that one for you.

What happened vs. what JP Morgan Suggested
So yesterday I posted on a PDF from JP Morgan that said eBay and Yahoo were the most feasable large-cap couples.

JP Morgan gave these 4 reasons for why eBay and Yahoo made the most sense: "1) increased scale, 2) strengthened global footprint, 3) broadened user insights, and 4) improved operational efficiencies."

So they got the main prediction right, but let's score their reasonings for the coupling and what's on the surface of the deal as we've discussed it thus far.

1) increased scale
Yes. Scale from the perspective of scaling advertising, scaling PayPal usage, scaling Yahoo usage through eBay toolbars. (do I understand "scale" as JP Morgan uses it?)

2) strengthened global footprint
No. This is - for now - a US only deal.

3) broadened user insights
This is one of those no-shit statements. It can't be helped. Data accumulates.

I'd change this to "more-targeted" user insights in that eBay buyers and sellers are the true long tail of business in the United States. Yahoo's wagging the SMBs, but eBay will give them insights into the HIGHLY SOCIAL eBay selling population.

The more I think about this the more excited I get. From a business perspective. Sicko.

4) improved operational efficiencies
What? What does this even mean? Just because I don't understand it I'm going to say NO.

What this means for Google and MSN
For Google this can't have been unforeseen - they must have known, as they pushed forward with Base and Wallet, that eBay would get nervous. I think this will have a serious effect on Google though ultimately.

Not because of missing out on the ad sales, but because of getting shut out from the emerging social marketplace on eBay and all the delicious data this makes.

Yahoo + eBay will be THE ecommerce supermall. Google will always have Base, but I think they're going to find that they get kind of lonely holding that neat idea/super clean concept while eBay's users become increasing Yahoo devotees.

I pointed to a quote yesterday that said something along the lines of "eBay still needs Google." And this much is certainly true - from a traffic perspective. But I think they've got in Yahoo a better long-term business partner.

Yahoo's been driving into the social, web 2.0 space and this is where eBay's innovated since day one with its buyer/seller ratings.

What will this do to MSN? Ugh. I don't want to even start on that one.

coverage:
Yahoo, eBay form Web advertising alliance (Reuters. Generic but pithy.)
EBay partner in search, online ads, payments(Chicago Tribune. Seems a little off base, but at least it's not as boring as Reuters)
Ebay, Yahoo join forces; stocks rise(Best coverage I've seen so far)
Yahoo! and eBay Form Strategic Partnership to Further Expand Their Businesses in U.S. (Press release)

Yesterday's coverage: JP Morgan: Yahoo and eBay "Most Likely" Large-Caps to Couple

Update 1:
Greg Linden, a former Amazonian, would like to see Amazon + MSN: Yahoo and eBay, Amazon and Microsoft

Update 2:
Gary Stein: Yahoo, Ebay and (not) Microsoft
Garrett French - MarketSmart Interactive | permalink | +marktd |