Amazon is pumping money into Google to promote Prime Day, and it could be a brilliant way to also boost Amazon's own ad business
- Amazon has increased its advertising spend with Google ads ahead of its annual Prime Day sale, according to research from ad agency Merkle.
- It's using Google Shopping ads, prominent visual ads that appear at the top of search results and link to Amazon.
- The Google ads can translate into revenue for Amazon because many of them direct to product pages where Amazon sells ad placements to advertisers.
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Amazon is gearing up for its annual Prime Day sale, and the company's promotional efforts are also helping it squeeze out some more advertising revenue.
Research from Dentsu Aegis Network's ad agency Merkle shows that in the past few months, Amazon has increased its spending on Google Shopping ads - an ad format that displays photos of products prominently at the top of search results. Merkle's research is based on data from Google's auction and looks at Amazon's ads for home goods products, a category that Amazon often heavily pushes in search ads.
According to the data, Amazon controls 70% of impression share for home-goods products, up from 50% in April. For comparison, Merkle's home-goods advertisers that buy Google Shopping ads typically control 40% to 45% of the impression share. Impression share measures the number of impressions an advertiser's ads received divided by the total number of impressions available.
The data suggests Amazon is being much more aggressive in Google Shopping this year, said Andy Taylor, director of research at Merkle.
"They seem intent on putting a significant investment into these ads - that should be good for Google because it drives up competition on the shopping auction."
Amazon did not respond to press inquiries. Google declined to comment for this article.
In addition to Google ads, Amazon is also promoting Prime Day on Facebook and Twitter.
Amazon has a history of changing its Google strategy
Amazon has a frenemy relationship with Google. While they compete for the same ad budgets, Amazon also relies on Google ads to drive traffic to its website through search ads.
Amazon's spending on Google Shopping ads has fluctuated over the past year. In April 2018, Merkle noticed that Amazon paused its spending on Google Shopping ads for two weeks and speculated that Amazon may have done so to test the impact of Google ads on traffic to Amazon.
By mid-May 2018, Amazon was buying Google Shopping ads again and ramped up its spend in the two weeks following Prime Day.
In December, Amazon shifted its holiday ad spending to Google's text-based ads, suggesting that Amazon had cooled again on Shopping ads, Merkle reported.
Amazon's ads on Google could help boost its own ad business
Amazon's Google ads double as a stream of advertising revenue for the e-commerce giant.
The Google ads often link to Amazon's product detail pages, where consumers read reviews and add items to their carts. Amazon sells an ad format called Sponsored Products, and according to Merkle's data, 40% of clicks on Amazon's Sponsored Product ads originated from product detail pages. So by linking its Google ads to product pages, Amazon is also helping its advertisers get their ads in front of more people.
"There does become the opportunity for a bit of arbitrage in terms of Amazon paying for ad clicks," Taylor said. "Amazon is the best positioned to bake in the expected ad revenue into how much they can afford to bid in Google shopping. A traditional retailer that doesn't have its own ads business is going to be [buying ads] on a pure sales standpoint."