Amazon abruptly halted its Google Shopping ad spending globally on July 22, causing significant disruption in the digital advertising landscape before resuming activity approximately a month later. The pause triggered a flurry of activity among competitors and sparked debate among search practitioners regarding the motives behind the move.
Mike Ryan, head of e-commerce insights at Smart Commerce, noted the dramatic shift, stating that Amazon’s market share in every market fell drastically on July 22, but rebounded to 74% in all markets except the United States by August 23, indicating a return to previous investment levels. “It was as if nothing had happened,” Ryan commented, highlighting the swiftness of Amazon’s return.
While Amazon declined to comment on the specific reasons for the pause, the company’s activity is monitored by search practitioners through Google’s Auction Insights tool, which tracks the share of search impressions gained by top advertisers in the market. The abrupt nature of the retreat and subsequent return has led to speculation about Amazon’s strategic intentions.
Theories surrounding Amazon’s motives range from an ultra-lean ad spending strategy during the period between Prime Day and Black Friday to a comprehensive incrementality test. The fact that the pause lasted exactly 31 days has fueled the latter hypothesis, suggesting that Amazon may have been evaluating the impact of its ad spending on overall sales and market position.
Amazon’s actions have underscored its significant market power and influence within the e-commerce sector. Last year, the company successfully repriced streaming CPMs to align with its own offerings, impacting Netflix’s plans for premium streaming ads. Similarly, the Google Shopping pause prompted immediate responses from competitors such as Target, Etsy, and Wayfair, which increased their activity in Google Shopping to capitalize on Amazon’s absence, according to Ryan and Sam Piliero, founder and CEO of performance agency The Moonlighters.
The temporary void created by Amazon’s retreat led performance agency executives to anticipate a potential decrease in cost-per-click (CPC) rates, creating opportunities for their clients. Google agency representatives even encouraged clients to increase their spending while Amazon was absent. However, the anticipated benefits primarily materialized for brands in categories with limited competition beyond Amazon.
Brett Fischer, associate director of performance media at Collective Measures, reported a 10% decrease in CPC rates for apparel and fashion clients during Amazon’s pause, noting that the e-commerce firm’s withdrawal had spurred increased spending on Google Shopping. “Our clients are just seeing a natural opportunity to continue to scale there … regardless of whether Amazon is there or not,” Fischer said.
Heidi Sturrock, a consultant at OMG Commerce, observed a more significant drop of 25-30% in CPCs during the week following Amazon’s initial retreat. However, she cautioned that “the cost relief lasted only a few days to a week,” indicating that the benefits were short-lived as other e-commerce platforms moved to fill the gap.
Scott Carruthers, senior director of paid search at Journey Further, noted that most clients experienced only a 2-3% decrease in CPCs during the 31-day withdrawal, with a single FMCG client seeing a more substantial 40% drop. “We didn’t really see it drop off,” Carruthers stated, suggesting that the overall impact was modest for many advertisers.
Sam Piliero of The Moonlighters concurred, noting that the decrease in CPCs was small and within normal variance. The limited and temporary nature of the CPC decrease highlighted the competitive dynamics of the Google Shopping landscape and the swiftness with which other players moved to capitalize on Amazon’s absence.
As Amazon resumes its Google Shopping activity in Europe and the U.K., practitioners anticipate potential challenges. While Carruthers suggested a return to the status quo, Sturrock cautioned that it could lead to increased Google Shopping CPCs. “Now that Amazon has reentered internationally, those advertisers may see their impression share compress in those markets,” she said.
The overall sentiment suggests that the anticipated opportunity for performance marketers failed to fully materialize and has potentially transformed into a minor threat. Ryan concluded, “Amazon left. The vacuum got filled nearly instantaneously. It’s filled now, and Amazon’s jumping back in. So someone’s got to lose out on this situation and somehow, I don’t think it will be Temu and Walmart.”
