Promoted Listings = Prisoner's Dilemma?

[sonoranboutique]

I've only used Promoted Listings a few times, but let me get this straight.  We already pay EBay to put our listings on here.  But if someone else wants their listings to appear ahead of yours, they can pay a 5% Promoted Listing fee for the privilege.  But if you pay a 10% Promoted Listing fee, your listing will appear even higher than theirs.  But if you BOTH pay a 10% Promoted Listing fee, your listings will appear at about the same level (the same as if neither of you paid fees, only YOU ARE PAYING THE FEES and ebay gets the money.)

Isn't this just a massive Prisoner's Dilemma?  Prisoner's Dilemma is basically a game theory problem where two prisoners receive a 1 year sentence if they choose not to betray each other.  But they are incentivized to betray each other, because if you don't betray the other guy while they betray you then you get a huge 3 year sentence.  If you both betray each other you get a 2 year sentence.  It would clearly be best for both prisoners to not betray each other and get the 1 year sentence, but they won't because they don't want to be betrayed and get the 3 year sentence.  So both "prisoners" end up choosing to pay 5% for Promoted Listings, even though it would be better for them both to choose 0%.

Obviously this is all very simplified, and not a perfect metaphor for a market with a lot of sellers.  You are not directly competing with any one seller.  But the core concept remains true - Promoted Listings is essentially a way for sellers to bid against each other on listing placement, and the more sellers are willing to bid, the more screwed everyone is by fees.  Theoretically if there were sellers willing to pay 90% Promoted Listing fees, their listings would show up higher and sell faster, leaving EBay with a higher fee percentage and buyers not seeing the listings of non-promoted sellers.

The system creates an artificial problem (people not seeing your listings because other sellers are willing to pay more fees), and EBay provides the solution by letting you pay even more fees than them.  The EBay CEO said that Promoted Listings has been a great source of profit.  This is evidence that promoted listings is either increasing your fees, or making your listings not being seen.  The Prisoner's Dilemma is a great way to see on a small level why Promoted Listings is designed to screw all sellers the more other sellers are willing to use it.

[sonoranboutique]

Another way to put it is that people are paying more for Promoted Listings because they're afraid their listings aren't being seen.  This causes other seller's listings to not be seen, causing them to pay more to Promoted Listings.  Then other sellers feel like theirs aren't being seen, then they pay more... rinse and repeat.

[luckythewinner]

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@sonoranboutique wrote:
Isn't this just a massive Prisoner's Dilemma?

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Or you can avoid the situation altogether by finding merchandise that fewer people are selling.

If someone wants to pay a fee to promote their listings when there are only 5 search results, that just makes my listing more competitive.

[vintagecraze50]

Promoted listings can work well for overly saturated categories of same type common items. They can also work for rare items because they could be seen possible on the side search bars.  It's really a response to the plethora of merchandise on here now and a way to make something stand out a bit.

[tunicaslot]

I sell cars and can put in a regular 3 line ad that costs $50 - but for another $100 - I can have a 1/2 page ad where my cars will be more visible or for $200 more I can have a full page ad where no one else's ads are allowed. Ebay is a venue like a newspaper - you can have a cheaper 3 line ad and hope your items are interesting enough to attrack buyers or you pay a higher % to have more visibility. The only ones that really have a need for that higher visibility are people that sell the same things everyone else does.

Other 3rd party venues - also do promoted listings so Ebay is not the only one trying to capitalize on the market where sellers of like items try to get their items front and center.

[vintagecraze50]

Kind of like the buy box on AMZ. I think those sellers pay for that.

[heritagerarebooks]

My sales have plummeted since they instituted promoted listings.  I'm giving in and am going to try paying the extra fees.  Somehow ebay always figures out a way to screw the seller.  This is a lose/lose situation for all sellers.

[dhbookds]

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@tunicaslot wrote:

I sell cars and can put in a regular 3 line ad that costs $50 - but for another $100 - I can have a 1/2 page ad where my cars will be more visible or for $200 more I can have a full page ad where no one else's ads are allowed. Ebay is a venue like a newspaper - you can have a cheaper 3 line ad and hope your items are interesting enough to attrack buyers or you pay a higher % to have more visibility. The only ones that really have a need for that higher visibility are people that sell the same things everyone else does.

Other 3rd party venues - also do promoted listings so Ebay is not the only one trying to capitalize on the market where sellers of like items try to get their items front and center.

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I like your newspaper ad analogy....but with an addition............ these ads can appear anywhere, not just in search results....  so there is the possibility of someone seeing it and deciding to buy....  While car accessory  stuff may be mainly in the car section of a newspaper..... advertising a lighted visor makeup mirror (which should be outlawed, lol) might garner more sales if placed in the woman's section........THAT, to me, is the advantage of PL........

[heyyoufoundit]

I think promoted listings could impact sellers of rare or 'one of a kind' items too.

Even those things fall into larger catagories, art, tools, books, clothing, whatever.

Someone searching doesn't always know what they're looking for until they find it 🙂

[luckythewinner]

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@heyyoufoundit wrote:

I think promoted listings could impact sellers of rare or 'one of a kind' items too.

Even those things fall into larger catagories, art, tools, books, clothing, whatever.

Someone searching doesn't always know what they're looking for until they find it 🙂 

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I suppose you could come up with a scenerio to prove or disprove just about anything. 

But if you are offering a copy of Bob Seger's Noah or Brand New Morning on LP ... trust me, it gets seen by everyone who is looking for one. 

[apaisleygirl]

HMMMM Sounds exactly like AZM buy box!!!!!

[smileytown18]

I personally tend to skip promoted listings when I shop.
I do not use them for my own listings because I find that in clothing (which is bulk of what i sell on this account), personal taste and fit is very important and ebay programming doesn't understand that.
In other accounts where I sell other types of items, it did bump me up a bit in sales, but wasn't worth the price. So I just stopped. I see less sellers are using it recently....

[apaisleygirl]

I refuse to use this service. I pay a lot of  money every month and if that means less sales then so be it.. In the spring I plan to launch my own site and Id rather pay google for adwords or boost over this service.... 20 years of selling they just keep finding more and more ways to take my money yet my sales always stay about the same... 

[membersinceaug2001]

Listing fees and ad revenue seem to be the cash cow on here.  The have no incentive to get your item sold.  So many suckers believe everything BigCorp tells them, so they play and pay right along!

Amazon is similarly rigged.  Pay even more to advertise, then why pay the host to list in the first place?  Would be cheaper to sell on own site.

[disneyshopper]

I, too, refuse to pay to promote my listings, but sales have really tanked.

Today I decided to try the Volume Pricing promo to see if that will drum up any sales.  I have it set to expire on December 1, so we'll see if it helps.

I should have waited until after my relists today.  Not sure if I can also include them at this point.