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ESRI imagery world 2D not projecting on the fly

Oliver_Burdekin

I have traced the outline of an area in Google Earth. Having saved the KMZ I've converted it to a shapefile and then reprojected the shapefile to Arc 1950 UTM 35s (using transformation 8). My data frame is in Arc 1950 UTM 35s. In the dataframe properties I have set a transformation to WGS84 (using transformation 8).

When I add the basemap "World Imagery" (which comes in Web Mercator Auxillary Sphere projection) everything is fine. See below:

However, if I choose the "ESRI Imagery World 2D" basemap (which comes in WGS84 projection) the shapefile and the basemap no longer line up. See below:

Why is this?

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