Amazon Is Said to Halt Google Shopping Ads as Rivalry Heats Up

Amazon has stopped buying a popular type of Google ad, according to Bloomberg, citing people familiar with the decision. The move deepens the rift between the technology titans and signals Amazon’s growing ambition in the digital advertising market.

The pullback affects highly coveted real estate at the top of Google search results, where retailers and e-commerce bid and pay handsomely to place colorful, image-rich ads that show up when consumers look online for things they want to buy. Amazon began bidding for these slots, known as product listing ads, or PLAs, in late 2016. That pitted the e-commerce giant against retailers like Walmart in online auctions that Google runs to decide who gets to place their ads on top of results.

Marketing firm Merkle noticed Amazon’s sudden retreat on April 28 by analyzing Google shopping ad data it tracks for clients. "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. Two people familiar with the companies confirmed Amazon’s move. They asked not to be identified discussing private matters.

Losing Amazon is a rare setback for Google’s Shopping ads, which have been a massive financial success. The Alphabet unit doesn’t disclose revenue from this business, but external estimates show this ad type has grown at three times the rate of Google’s regular text Search ads. Amazon largely bought PLAs for items like office supplies, furniture and athletic apparel, according to Merkle’s Taylor. "They were probably spending $50 million a year, but it might be higher than that," he said.

Some ad buyers interpreted Amazon’s move as a sign the company is accelerating its own digital ad offerings, which has been urged by marketers and Amazon shareholders. The company has the potential to challenge the digital marketing duopoly of Google and Facebook, although it has expanded slowly so far.