Amazon Stops Buying High-Revenue Prized Shopping Ads On Google

Amazon.com.Inc. stopped buying high-revenue competitive Google ads. This significant decision deepens the feud between the Titans of technology and gives us a signal of Amazon’s growing ambition in the market of digital advertising. This act of withdrawing effects highly desired real estate located on the top of search results in Google, where e-commerce and retailers bid to pay a high amount of money to advertise image-rich, attractive and eye-catchy advertisements. These ads show up when the customers online look for various products of their choice including headphones, shoes, clothes, mobiles and other products to purchase.

In late 2016, Amazon started its bidding for these slots, which are known as the product listing ads, or the PLAs. That made a significant impact for the e-commerce giant to against retailers like Walmart Inc. in auctions conducted online which Google runs for deciding who gets to place their advertisements on top of results for various searches  like “white sneakers” and “modern furniture.”

On April 28, Amazon’s sudden withdrawal was noticed by Merkle Inc., a Marketing firm from analyzing the data of Google shopping ad tracks for the clients. Andy Taylor, research director at Merkle Inc. in his recent blog, wrote, “The widespread vanishing act observed over the last week point to Amazon itself pausing its shopping campaigns,” Andy Taylor, a Merkle research director, wrote in a recent blog.

Losing Amazon can become a setback for Google’s Shopping ads, which is known to be a huge success financially.  Although Alphabet Inc. unit doesn’t reveal any details of revenue from this business, estimates from external sources indicate that this particular ad type has grown at the rate of three times that of Google's regular text Search Ads. According to Merkle Taylor, furniture, athletic apparel, office supplies were the most bought PLAs by Amazon. He stated, “They were probably spending $50 million a year, but it might be higher than that.” Bloomberg stated that a Google spokeswoman said, “While we don’t comment on individual customers, it’s not unusual for advertisers to adjust their campaigns at any time for any number of reasons.”

Merkle found units running Google shopping Ads that include Zappos and some other Amazon subsidiaries, the units which were using Google Ads a long time before Amazon came into the bidding business and which are often run independently from the main company. After this decision, some ad buyers believe that Amazon’s move is a sign that the company is accelerating its own digital ad offerings, which has been a recommendation from the Amazon shareholders and marketers. The company does have the potential to challenge the digital marketing duopoly of Google and Facebook Inc., although it has expanded slowly so far.