Some large search budgets are moving to Amazon, say agency executives

October 10, 2018

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A CNBC survey of several advertising execs found some advertisers are shifting large percentages of their Google search budgets to Amazon.

Two executives said some advertisers that sell on Amazon are moving 50 percent or more of their search budgets to Amazon.

Why you should care

Over the past few years, Amazon has been steadily building up a sizeable ad business. Last quarter Amazon reported roughly $2 billion in advertising sales, an increase of 129 percent year over year. That’s still dwarfed compared to Google’s nearly $23 billion in ad revenues last quarter. But looking across the digital advertising landscape, Amazon is about the ripest opportunity out there — particularly for consumer goods companies selling on the platform.

Key to Amazon’s success as an ad vehicle is its direct correlation to sales. Google struck gold by connecting advertisers to search intent. Amazon can go a step further and connect advertisers directly to purchase intent and purchasing all right on its platform. Google has been working on several initiatives to eliminate purchasing friction and deliver similar connections for advertisers and retailers. Most recently, Google Shopping Actions enables mobile checkout across a network of retail partners from Search, Google Express and Google Assistant.

But particularly for merchants and brand selling on Amazon, its ad programs are proving more than irresistible. “Every company I know that sells on Amazon is basically moving budget to Amazon because they have no choice,” Mark Douglas, CEO at Steelhouse, told CNBC.

Amazon Sponsored Products and Sponsored Brands (formerly Headline Search Ads) — pay-per-click product search ads — are becoming table stakes for sellers. Those familiar with retail placement fees — those endcaps don’t come free — will see similarities here.

The findings are in line with our own Amazon advertising research, which we will be presenting at SMX East on October 25.

More on the findings

  • Budget shifts are coming primarily from consumer packaged goods companies.
  • A Havas Media exec said 20 to 30 percent of its clients are moving 50 to 70 percent of search budgets to Amazon.
  • Two executives cited Amazon budget increases of 300 to 400 over last year.
  • Some perspective: A Merkle executive said they aren’t seeing search budgets shift to Amazon, but that Google spending is flat.

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