Amazon dramatically reduced its Google Shopping ad expenditure globally on July 22, resulting in a significant drop in market share, but resumed spending on August 23. The interruption and subsequent return have implications for performance marketers and competitors in the e-commerce landscape.
On July 22, Amazon reduced its investment in Google Shopping advertisements to near zero across all its operational markets worldwide. This sudden move triggered immediate speculation among search marketing professionals regarding the motivations behind this retreat and its potential impact on their clients, particularly concerning potential cost savings.
This period of reduced spending by Amazon lasted for 31 days. However, the e-commerce giant reversed course and resumed its Google Shopping ad activity. The re-entry occurred on August 23, marking the end of the reduced spending period.
Mike Ryan, the head of e-commerce insights at Smart Commerce, provided specific data regarding Amazon’s market share fluctuations. Ryan reported that Amazon’s market share plummeted from approximately 70% to 0% following the initial reduction in ad spending on July 22. However, after Amazon resumed its ad activity on August 23, its market share rebounded to roughly 74% in all markets with the exception of the United States.
“It was as if nothing had happened,” stated Ryan, reflecting the swiftness and completeness of Amazon’s return to its previous levels of activity. This statement underscores the impact of Amazon’s actions on the broader Google Shopping ecosystem.
When contacted for clarification, an Amazon spokesperson declined to provide an official statement regarding the company’s motivations or strategies related to the Google Shopping ad expenditure adjustment. However, Amazon’s activities remain transparent to search marketing professionals. This transparency is achieved through tools such as Auction Insights, offered by Google, which allows practitioners to monitor the share of search impressions secured by leading advertisers relative to their own clients.
The precise reasoning behind Amazon’s 31-day reduction in Google Shopping ad spending remains unclear. Potential explanations include a strategic approach to ad expenditure during the period between Prime Day and Black Friday or a large-scale incrementality test aimed at evaluating the effectiveness of its ad campaigns. The latter theory, given the exact duration of the pause, has gained prominence.
Amazon’s actions serve as a noteworthy illustration of the e-commerce giant’s market influence. This influence extends beyond standard fluctuations in ad spending, which individual brands routinely adjust according to seasonal demands or specific campaign requirements.
Last year, Amazon successfully renegotiated streaming CPMs (cost per thousand impressions) to align with its own offerings. This action impacted Netflix’s plans to establish a premium pricing structure for streaming advertisements. Similarly, the reduction in July prompted a response from competitors such as Target, Etsy, and Wayfair. These platforms increased their activity on Google Shopping during Amazon’s absence, as noted by both Ryan and Sam Piliero, founder and CEO of The Moonlighters.
Performance agency executives expressed hopes that cost-per-click (CPC) rates would decrease during Amazon’s pause, creating opportunities for their clients. Representatives from Google even encouraged clients to increase their spending in response to Amazon’s absence. However, sources reported that substantial benefits primarily accrued to brands operating in sectors with limited competition, excluding Amazon.
Brett Fischer, associate director of performance media at Collective Measures, reported a 10% decrease in CPC rates for apparel and fashion clients during the period of reduced Amazon ad spending. Fischer suggested that Amazon’s temporary withdrawal contributed to increased investment in Google Shopping. He observed that clients recognized a scaling opportunity, regardless of Amazon’s presence.
Heidi Sturrock, a consultant at OMG Commerce, reported a more significant drop in CPCs, observing a decrease of 25-30% during the week following Amazon’s initial retreat. Sturrock noted the limited duration of the price relief, stating that it lasted only a few days to a week.
Scott Carruthers, senior director of paid search at Journey Further, indicated that the anticipated decrease in CPCs was not as substantial as expected, with other platforms filling the void. Except for a single FMCG client that experienced a 40% decrease in CPCs, the agency’s remaining clients saw only 2-3% decreases during Amazon’s absence. “We didn’t really see it drop off,” Carruthers stated.
Piliero concurred, stating, “There has been a small decrease in CPCs, nothing out of the norm.” This sentiment suggests that the overall impact on CPC rates was less significant than initially anticipated.
While U.S. marketers await Amazon’s full return and its subsequent influence on pricing dynamics, the company’s re-entry in Europe and the U.K. poses potential challenges for practitioners. While Carruthers suggested a return to the status quo, Sturrock proposed that Google Shopping CPCs might increase as a result. “Now that Amazon has reentered internationally, those advertisers may see their impression share compress in those markets,” she stated.
The temporary opportunity for performance marketers has essentially disappeared, turning into a potential threat. This shift underscores the significant impact of Amazon’s actions on the competitive landscape of Google Shopping.
“Amazon left. The vacuum got filled nearly instantaneously. It’s filled now, and Amazon’s jumping back in,” Ryan concluded. “So someone’s got to lose out on this situation and somehow, I don’t think it will be Temu and Walmart.”
