LAS VEGAS, NV – Speaking at the eBay Developers Conference 2006, company chief strategy officer Michael van Swaaij announced the launch of “eBay AdContext,” a new contextual advertising network which will allow eBay sellers to promote auctions on websites external to eBay.com.Some industry analysts are calling AdContext a direct challenge to search giant Google’s dominance of the online contextual advertising sector.

“It is a way for web sites to get an additional monetization stream,” said Swaaij. “We want to increase the number of times buyers come to particular sites.”

The AdContext system scans the text of websites for keywords and returns links to relevant listings featured on the eBay system, according to Swaaij. As auctions conclude and eBay listings change, the advertising on affiliated websites will automatically change, as well.

According to statements issued by eBay, “AdContext was developed using eBay’s keyword selection technology, which uses proprietary eBay data to match contextual eBay ads to the web page. The contextual ads take into account the popularity of certain keywords on eBay, not just the keywords on a given Web site, making them relevant to what people are actually shopping for on eBay.”

The company offered a hypothetical sports website as an example of how AdContext will work, saying that a “site about sports could use eBay AdContext to display ads for sporting goods listings or eBay search results for memorabilia related to a specific sports team. When a user clicks on the eBay ad, they are led directly to the eBay site – either to the listing, the category, or the search results page.”

While early response to eBay’s announcement has raised questions about how much of a “threat” the AdContext represents to Google’s existing AdSense program, eBay is downplaying the competitive aspect and eBay spokesman Hani Durzy described AdContext as “complementary” to online ad networks already in operation by other web companies. Durzy said he expects that many websites will offer both eBay and other contextual advertising on their sites.