EBay to Test AOL Performance in Renegotiated Ad Deal

14 May 2002

Online auction site eBay revealed last week that it has renegotiated an ad deal with AOL Time Warner, imposing performance goals the media giant must meet to secure maximum payment.

The original deal was for two years – mid-march 2002 through March 2004 – for which eBay was to pay $18.75 million (€20.6m; £12.9m) per annum. However, the deal will now continue into the second twelve months only if AOL TW hits targets, and the fee for this later period has been reduced to a maximum of $15m.

Exactly what performance criteria AOL TW must meet has not been disclosed, though eBay did reveal that its payments would reflect “online advertising impressions delivered”.

As a further amendment to the agreement, AOL TW can take the deal into a third twelve-month period if it hits targets in the second year. However, the maximum price eBay would have to pay for this final year would be $10m.

The revelation that eBay’s spending on AOL TW will fall sent the troubled media mammoth’s shares down to a 52-week low of $16.96 [WAMN: 13-May-02].

Data sourced from: The Wall Street Journal Online; additional content by WARC staff