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Amazon is gobbling up 'significantly' more Google ads than ever during the holiday season — and it reveals a change in the e-commerce giant's strategy

amazon ceo jeff bezos
Amazon CEO Jeff Bezos at the Allen & Company Sun Valley Conference last year. Drew Angerer/Getty Images

  • Amazon is spending more on Google's text-based ads than it has the past couple of years during the holidays, according to new data from Merkle.
  • This could signal a shift in Amazon's willingness to pump more money into Google earlier in the fourth quarter to drive important holiday sales.
  • While Amazon is beefing up its investment in Google's text-based search ads, it is not investing the same amount in coveted Google Shopping ads, possibly because Amazon competes with Google in this area.
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Amazon is leaning hard on Google.

According to new data from the advertising agency Merkle, Amazon has ramped up the number of Google search ads it purchases to drive traffic to its website during the holidays this year.

While the jump in ad spend isn't surprising during the advertising-heavy fourth quarter of the year, the timing of Amazon's ad spend is intriguing.

Merkle tracked Amazon's ad spend during Cyber Weekend and found that the e-commerce giant upped its Google search ads "significantly" during the week of Thanksgiving. The agency said that while it was usual to see Amazon aggressively flood Google with search ads during Black Friday and Cyber Monday, Amazon's highest ad spend didn't typically kick in until December.

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"In each of the last two years Amazon's text ad impression share has grown steadily throughout the holiday season, with only modest increases around Thanksgiving," Merkle's Andy Taylor and Mark Ballard wrote in a blog post.

Moreover, the company predicts that if Amazon continues to invest at the same pace in coming weeks, this year will mark Amazon's largest investment in Google text ads to date.

Read more: Amazon's ad sales are up 150% in just the past month — and it looks as if it will be a happy holiday season for Google and Facebook, too

Here's a look at Amazon's ad spend from November 1 to Thanksgiving Day (November 22) compared with Merkle's group of retail clients:

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Google Amazon ads Merkle
Merkle

But Amazon is cutting back on Shopping ads

Amazon is buying more of Google's text-based ads to drive traffic, but it's not investing the same in Google Shopping ads, according to Merkle. Shopping ads are a prominent ad format at the top of search results that includes product photos and links to let consumers comparison shop.

Amazon's share of Shopping ads has "increased modestly since mid-November, but the retailers studied are seeing more much significant growth in their own impressions share during the same time frame," the Merkle execs wrote.

Google Amazon ads Merkle
Merkle

"This seems to indicate that the auction changed over the past couple of weeks to organically increase impression share for advertisers," the blog post said. "As such, the data indicates that Amazon itself doesn't seem to be getting significantly more aggressive in the Shopping space, and may even be dropping off slightly relative to other advertisers."

During the week before Thanksgiving, retailer sales tied to clicks on Google Shopping ads grew 45% year-over-year, Merkle reports. Black Friday sales were up 41%, while Cyber Monday sales rose 42% in the same time period.

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In general, brands are increasingly investing in Shopping Ads, and Merkle separately recently reported that ad spending on the format had grown 40% year-over-year this quarter.

Amazon has a rocky history when it comes to Google Shopping ads, partly because commerce advertising is an area in which Amazon and Google compete.

This spring, Merkle noticed that Amazon quietly stopped buying Google Shopping ads temporarily, hinting that the company might be developing a new copycat version of Google Shopping ads.

Amazon does offer a similar ad format to Google Shopping ads called sponsored product ads that are keyword-based placements within search results. In September, Amazon consolidated its advertising business into one brand with the goal of making it easier for advertisers to understand, but buyers said the move didn't necessarily help them understand Amazon's complex advertising options.

On February 28, Axel Springer, Business Insider's parent company, joined 31 other media groups and filed a $2.3 billion suit against Google in Dutch court, alleging losses suffered due to the company's advertising practices.

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