Amazon and Google: Friends, Enemies or Frenemies?135 views
Reports show Amazon is Google’s biggest search advertiser, but the online retailer is reportedly developing its own ad program to rival Google AdWords.
The relationship between Amazon and Google is becoming more and more interesting: On the one hand, Amazon reportedly plans to take on Google’s online ad business. On the other, a number of reports show that the online retailer has invested big in Google’s search ads.
To wit: Amazon spent $157.7 million on Google U.S. search ads in 2013, topping Ad Age’s list of Google’s 25 largest U.S. search advertisers. In comparison, other retailers like Walmart and Sears spent $59.7 million and $59.2 million, respectively.
Meanwhile, the Top Retailers In Paid Search report from market research company AdGooroo reveals that Amazon garnered the most Google AdWord impressions in 2013, followed by Walmart, Target and Sears.
It’s no surprise that Amazon is a big spender on search. According to Richard Stokes, chief executive officer (CEO) of AdGooroo, many retail marketers consider paid search as one of the most effective customer acquisition tactics and thus allocate a large percentage of their ad budgets to this online marketing medium.
“Numerous studies have shown that the majority of purchases start with an online search,” Stokes explains. “As such, retailers are big spenders on paid search advertising, because it’s the most effective medium to engage and influence these shoppers while they are actively searching for product information and making purchase decisions.”
Google has two major ad products. It serves text-based keyword ads via Google AdWords, which is also the foundation of Google’s online advertising business. At the same time, the tech giant serves product search ads via Google Shopping, or Product Listing Ads (PLAs).
Stokes notes there’s a shift in paid search budgets from traditional text ads to PLAs, as AdGooroo’s recent report reveals that the top 20 advertisers surveyed spent an average of 63 percent of their desktop paid search budget on PLAs, compared to 37 percent on traditional text ads.
Currently, Amazon displays several types of ads on its pages, including text-based keyword ads placed by Google and other third parties. But the company hasn’t yet purchased Google’s product ads.
While Amazon is spending big on Google’s search ads, the online retailer is reportedly developing its own ad program called Amazon Sponsored Links to compete with Google AdWords.
Looking forward, will Amazon and Google remain friends, or become enemies?
Stokes thinks that they are more likely to be frenemies.
“Amazon and Google are rivals in the sense that both would like to be the destination where shoppers start their product searches. However, they also depend on each other for a substantial portion of their respective businesses,” he notes.
“In the end, a large percentage of consumers will continue to rely on both, so one could consider this a battle for consumers looking to buy now,” he adds.
Google had no comment.
As of deadline, Amazon had not responded to a request for comment.