Amazon investing in mobile ads on Google

In Berlin in 2014, Google’s Executive Chairman, Eric Schmidt, said, “Many people think our main competition is Bing or Yahoo. But really, our biggest search competitor is Amazon.”   Amazon and Google have competed for market share for years, primarily in the area of product searches. Now Amazon is testing the use of mobile ads on Google, according to a report by Merkle, a performance marketing agency, resulting in a very interesting co-existence.


An example of an Amazon PLA ad on Google (Merkel Inc)

 In the past year, mobile has grown exponentially becoming the most important vehicle for online ads.  Facebook and Twitter both generate more than 80.0% of their revenues from mobile.
 
Mobile is also the most important driver of Alphabet’s Google’s online ad business. An important trend that is quickly affecting Google is growth in its PLAs (Product Listing Ads) through text ads. Product Listing Ads are cost per click (CPC) ads which online merchants purchase through AdWords. Product Listing Ads feature a product image, and provide direct links to the product pages on an e-commerce website where users can shop online.

PLA's were launched by Google in 2012, effectively  changing its product search format from a free service to a paid advertising platform. And since then, Amazon had not advertised with Google’s PLAs. Presumably, Amazon did not participate in Google Shopping because the company did not want to contribute to Amazon’s bid to become the primary destination for shopping searches. And, Amazon did not want to pay Google for customers they may have gotten on their own via organic searches.  However, as Google takes the lead as search provider for mobile shopping, Amazon began to test PLA ads on Google.   

Amazon began to run PLAs on Google beginning on December 20th, 2016,  focusing on the home goods market, and the retailer's share of PLA impressions has grown from less than 10% on December 19th to 21% on January 30, 2017.  Amazon is investing more in PLA traffic on mobile than desktop. Its impression share for phone PLAs is roughly twice as high as it is for desktop PLAs.

While Amazon has yet to aggressively expand its use of PLAs into other categories, once it does, competition between Google and Amazon to be consumer’s first choice for online shopping will surely heat up. How this will affect retailers everywhere remains to be seen. 



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