Amazon Stops Purchasing Competitive Google Shopping Ads

Amazon has ceased purchases of ads at the top of Google search results, a much-prized position for which advertisers and retailers pay handsomely to place eye-catching images. Google runs online auctions for these slots, dubbed products listing ads (PLAs) and Amazon, which began bidding in late 2016, found itself in competition with rival Walmart there. On April 28, Merkle, a marketing firm that analyzes Google Shopping ad data, first noticed that Amazon was missing from those coveted slots. Two sources confirmed the news.

According to Bloomberg, “the move deepens the rift between the technology titans and signals Amazon’s growing ambition in the digital advertising market.” Google’s Shopping ads “have been a massive financial success,” with “external estimates show[ing] this ad type has grown at three times the rate of Google’s regular text Search ads.”

Amazon_Logo

Merkle research director Andy Taylor said that Amazon “largely bought PLAs for items like office supplies, furniture and athletic apparel.” “They were probably spending $50 million a year, but it might be higher than that,” he said. Amazon did not comment, but Google noted that, “it’s not unusual for advertisers to adjust their campaigns at any time for any number of reasons.”

Amazon subsidiaries such as Zappos still run Google Shopping ads, but Merkele said that, “these units are often run independently from the main company and were using the Google ads long before Amazon started bidding.”

Amazon shareholders and marketers have urged Amazon to increase its own digital ads and “challenge the digital marketing duopoly of Google and Facebook,” and some saw this move as a sign that the company is doing just that. But Mizuho Securities USA “recently estimated Google’s product ads are four times as effective as Amazon’s at getting people to buy.”

Although “most spending on Amazon ads comes from marketers switching away from tradition offline ads, rather than cutting into Google budgets,” Mizuho concluded that, “Amazon could improve and surpass Google.”

Relations between the two companies have been tense since “Amazon pulled some Google hardware from its e-commerce shelves [and] Google retaliated by blocking YouTube from Amazon’s streaming devices.” Google has also upped its competition with Amazon’s Alexa for voice-based searches, and has partnered with its rivals Walmart and Target on “voice-based online shopping and delivery.” Finally, Google introduced an ad service “that lets retailers build digital checkout carts that track online shoppers across their phones, desktop computers and smart speakers,” similar to Amazon’s shopping cart.