In a recent report conducted by the popular online auction website eBay, they found that companies that pay for keyword advertising in search engines such as Google, are in fact wasting billions of dollars a year. eBay believes that most of the money spent on buying up search terms was a waste of money and had little effect on sales.

Google has built its business on the back of persuading advertisers to buy key words such as their company name or popular terms eg. Christmas, insurance. The current spend on Advertising in the UK alone is worth around £3 billion a year with Google accounting for 90% of that.

In the 25 page report written by eBay, their research outlines how consumers will type in organic keywords to get to the webpage they require so companies will be higher up the rankings without having to pay.

This implies that, whilst keywords are still valuable to small enterprises, brand keyword advertising has neither persuasive nor informative value to well-known corporations. In carrying out a study to see how little the effect of paid keywords has on eBay’s sales, the company removed all paid-search keywords using its brand name from Microsoft and Yahoo.

The results show that almost all of the forgone click traffic and attributed sales were immediately captured by natural search,” the auction site found. Removal of these advertisements simply raised the prominence of the eBay natural search result.

eBay also conducted a separate test of the effectiveness of non-branded keywords – such as “cell phone” – and found “search engine marketing had a very small and statistically insignificant effect on sales. The report states that search engine marketing is weak and the results found on experimenting on eBay itself will likely be the same to other major companies who are spending billions of dollars a year unnecessarily.