For a significant period, Amazon invested heavily in advertising through Google Shopping. This is logical, as the online retailer aims to connect with customers who are not using its platform.
In many ways, Amazon (AMZN) Runs a store similar to Macy's, Marshalls, or other retail chains. Indeed, it benefits from a large Prime membership group it can reach directly, along with a broad customer base.
However, advertising contributed to the development and will continue to aid in expanding the customer base.
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Currently, the leading online retailer has quietly and suddenly removed all of its Google Shopping advertisements. Amazon has not officially addressed this issue, but the shift had an immediate effect on income, visitor numbers, and bidding patterns.
"This became effective on July 23. In under 48 hours, Amazon's impression share fell from approximately 60% to 0% in key global markets. That isn't a slowdown, it's a full withdrawal. And indeed, we are already noticing the consequences across client accounts," Digital Position noted.
Google Shopping displayed Amazon products and pricing on Google instead of on Amazon's website or application.
The shift is extensive, with Amazon removing its presence from the Google Shopping network in the United States, United Kingdom, Germany, and Japan.
Here's how Amazon has impacted Google up to now
- Complete ExitAmazon vanished from Shopping auctions between July 21-23, in various markets and categories.
- Auction Rebalancing: With Amazon no longer present, a significant portion of shopping traffic and bidding competition has disappeared.
- Global ImpactThis was not limited to the U.S. It was carried out worldwide and almost instantly, surprising the entire PPC community.
- Zero Clarity from Amazon: No announcement has been made.
Amazon's modification has significant consequences
The main problem is that Amazon's absence from the bidding process for ad space has led to a decline in cost-per-click rates. It has also benefited smaller companies, giving them more exposure.
Amazon, it should be noted, has not responded to the exit, and it may easily return to Google Shopping.
"Amazon has not made the reasons for its departure public, so we are uncertain about the specific motivations. It is clear, however, that in a perfect scenario, Amazon would rather not direct ad spending to Google, as it is both expensive and supports a competitor in the advertising sector," wrote Neil Saunders, Managing Director at GlobalData, onRetailWire.
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He believes Amazon might simply be testing the waters.
"Perhaps this decline is an opportunity to assess the effect and importance of utilizing Google. Alternatively, it could be a broader strategic effort to achieve independence, particularly as searches related to artificial intelligence grow in relevance. Only time will reveal the truth," he added.
He mentioned that Amazon does have a type of deadline.
"The upcoming major event for Amazon is Prime Big Deal Days in October, making it intriguing to observe whether they resume advertising on Google during this time," Saunders mentioned.
Google might not have succeeded for Amazon.
Amazon removing itself from Google could create opportunities for smaller companies. This might be a mistake if Amazon lets specialized players establish themselves, similar to how it effectively supported Chewy.com by stepping back from certain pet product areas during the early stages of the pandemic.
Retail book author Mark Ryiski indicates that there wasn't one main cause for the shift.
"Since we can only guess, I'd say it wasn't just a single factor, but probably the main one is that the Google Shopping platform wasn't producing the desired results. At least not to the extent it did before," he wrote.
He noted that Amazon could be creating an opportunity for its competitors.
"Amazon's exit presents opportunities for brands and retailers, although the downside is that brands that previously received a 'free ride' through Amazon ads may now have to boost their advertising spending," he wrote.
A member of the RetailWire Brain Trust was more direct in her evaluation.
Always focused on Benjamin's. I believe this will result in a net loss for Amazon. It's petty and foolish," she wrote. "By the way, shopping and searching is turning into a hassle on both platforms due to all the sponsored posts.
Amazon leaves Google Shopping:
- Amazon might return for the following Prime Day.
- Amazon could potentially generate its own competition by giving competitors greater visibility on Google.
- By remaining silent about the update, Amazon has prompted numerous questions about its future actions.
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