UPDATED 13:15 EDT / MAY 11 2018

CLOUD

Amid growing rivalry, Amazon reportedly cuts ad buys from Google

Market data and a new leak suggest that Amazon.com Inc. has significantly cut back on efforts to target shoppers via Google search results as it ramps up its competing advertising business.

The news was broken today by Bloomberg, which cited “people familiar with the decision.” The tipsters’ information is backed up by research from Merkle Inc., a major marketing agency, which saw a sharp drop in Amazon’s ad placements on Google starting late last month.

The move affects the content that shows up in the search engine’s Shopping section. Amazon has reportedly halted its use of Google’s product listing ads, which display prompted merchandise at the top of search results when consumers looks up certain items. The company’s retreat comes less than two years after it first started competing for PLA spots against Walmart Inc. and the other prominent rivals that make use of them.

According to Merkle estimates cited by Bloomberg, Amazon was likely spending $50 million or more per year on such promotions. That would amount to a substantial loss for the search giant, though hardly a crippling one given parent company Alphabet’s nearly $25 billion in net revenue in its recently reported first quarter alone.

Amazon’s decision to stop using PLAs could be directly related to its intensifying competition with Google in the online advertising market. Amazon’s most recent earnings report revealed that revenue from sources it groups under the “Other” category, which consists mainly of ad sales, jumped a massive 132 percent in the first quarter, to $2 billion. Amazon has reportedly been stepping up efforts to engage ad agencies recently in a bid to sustain this growth.

Yet while the online retailer may be going after Google more aggressively, its Zappos clothing subsidiary and several other units apparently continue using PLAs. Of course, that may change in the future as the company continues advancing on Google’s turf.

Amazon isn’t the only contender trying to loosen the company’s grip on online advertising. Earlier this month, Microsoft Corp. debuted a new ad network that promises marketers access to 63 million search users Google can’t reach. The platform’s targeting algorithms use data from services such as Skype, Outlook and Bing to determine the best way of engaging consumers. 

Image: Amazon

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