istock.com/TigerStrawberry
Amazon abruptly stopped bidding on Google Shopping ad auctions, opening up a rare paid-search opportunity for retail brands but also leading to a wide range of speculation about Amazon’s motives.
Average shopping-ad impression shares for Amazon on Google Shopping were as high as 60% in the U.S. and 55% in the U.K. as recently as July 17, but started plunging on July 21 and reached zero by July 23, according to analysis by Smarter Ecommerce attained by Digiday. Media agency Tinuiti confirmed the exit.
Many wondered if Amazon’s move was a temporary pullback or a full withdrawal to focus on direct-customer acquisition and double down on its advertising platforms. According to JungleScout’s most recent Consumer Trends Report, 56 percent of U.S. consumers start their product search on Amazon, above search engines (42%) and Walmart (29%).
The move could lead to lower cost-per-click (CPCs), higher impression share, and improved click-through rates for other retailers and brands.
Amazon's 'Total Stop' of Google Shopping Spend Comes as a Surprise to Some
In a LinkedIn post, Mike Ryan, head of e-commerce insights at Smarter Ecommerce, said that although Amazon has been gradually reducing its Google Shopping spend since mid-2024, the “total stop” was a surprise.
His speculation on why Amazon exited ranged from Amazon no longer wanting to fund a large competitor to potential internal shifts linked to AI or its advertising strategy.
He didn’t think it was because of “efficacy,” or the Google Shopping platform no longer providing value to Amazon. He wrote, “I've long argued that Amazon uses Google Shopping ads as a Trojan horse: Google can't help but swallow the ad revenue, it's too alluring -- and yet there is the constant risk that Amazon is stealing future product searches and bringing them into their own platform.”
He said the shift, whether short or long-term, is “sure to make competing retailers rejoice. However, it might be less exciting for brands & sellers, who often benefit from Amazon advertising on their behalf.”
Tinuiti Suggests a Number of Reasons for Amazon's Exit From the Arrangement
In a blog entry, Tinuiti speculated the reason for exiting could be that Amazon is testing whether Google Shopping ads are “merely cannibalizing existing organic traffic,” or it’s a negotiating tactic to earn better terms from Google. Another potential reason cited was Amazon looking to improve margin optimization by funneling customer acquisition through internal advertising platforms, or making expense cuts following its second-quarter earnings shortfall (although the AWS cloud business was the laggard).
In 2018, Bloomberg reported that Amazon was spending over $50 million annually on Google Shopping ads. Tinuiti said the “most forward-looking” view is that Amazon, with its Rufus AI shopping assistant, is shifting to direct customer acquisition and away from relying on Google’s generative AI-powered funnels.
Tinuiti wrote, “This aligns with a broader industry trend where brands are focusing on Retail Media Networks (RMNs), which offer superior return on ad spend (ROAS) and closed-loop measurement capabilities via first-party data. This move could be indicative of a reallocation of budget from traditional search advertising to RMNs, where Amazon is a leading player.”