Om Malik correctly pointed out that Google Checkout is a loss leader for the CPA Google ad network.

It is a FLANK assault on eBay’s PayPal’s MERCHANT business. . . it is even more of a frontal assault on eBay’s marketplace business. Here is something to noodle over.

eBay + eBay AdContext = Google Sponsor Link Search + Adsense + Google CheckOut - Non Products Searches

OR

eBay + eBay AdContext+ Crawled Product Search (like vast) = Google Search + Adsense + Google Checkout - Non Products Searches

Get it? The point is that eBay IS ALREADY a semi CPA network with the addition of AdContext. The pieces are all there for a major confrontation of Google & eBay. . . ok. . . I’ve screamed and yelled before that CPA is not panacea or a CPC killer. And I know no one is listening especially OM.

BUT if the world is going to wholesales turns to CPA advertising. . . the winner is not Google , its eBay. . . (or more likely, affiliate networks like commission junction/linkshare ) eBay is much closer in achieving the CPA vision than Google. All eBay would need to build is a SYI form that is not just for creating listings but for creating syndicated “ads” (ofcourse not all merchants wants to create ads, in that case AdContext actually works great by automatically generating ads) . [Google is working this, to autogenerate ads for advertisers for an additional fee]

To not only fend off GoogleCheckout, but counter assault, eBay needs to expand beyond products (my guess is 50% Google’s ad revenue) to services (another 35%?) + add a crawler of somesort to aggregate more commerce content not on eBay.

The affiliate networks on the other hand needs to band together, offer a checkout solution, and hire more PHD’s to automate ad placement and relevancy. (or sell themselves to a GYM+E)

Google is not the only game in town. The next 12 months will be very very interesting in the advertising industry.