Search Advertising Ripple Effect Expected From Amazon, Whole Foods Acquisition

Amazon's acquisition of Whole Foods will likely influence search strategies, having a ripple effect across retail, according to Eric Marcy, president of AdGooroo. 

Marcy believes that investments will rise during the next 12 to 18 months. Marketers will see an increase in competitive bidding that will raise the cost per click, affecting the return on investments of campaigns. "You will start seeing an uptick in online searches for groceries," he said. The data only reflects desktop search, but he believes "mobile clicks will also rise. Conversions will probably remain more efficient on the desktop, for now, because that's where people research their weekly shopping."

It has been more than a week since Amazon announced the purchase of Whole Foods, so AdGooroo dug into U.S. Google desktop text ad activity on 124 non-branded grocery store and grocery delivery keywords from June 2016 through May 2017, including terms such as "grocery store," "groceries delivery," "grocery delivery service," "online grocery shopping," and "supermarket." 

AdGooroo found that during these 12 months, 1,741 advertisers spent $4.5 million sponsoring the non-branded grocery keyword group — an increase of 245% in ad spend from the same period ending in May 2016.

It also shows that the top 10 paid-search spenders on the keyword group have dramatically increased their investment over the last 12 months compared to the same period ending in May 2016.

Wal-Mart Stores led all paid-search advertisers with an estimated $858,000 in ad spend on the non-branded grocery keywords during the 12-month period, up from $51,000 in June 2015 through May 2016.

AdGooroo also looks at Wal-Mart's relationship with Uber and Lift to expand its curbside grocery pickup service., which Walmart acquired in September last year, spent an additional $82,000 on the keyword group during the period, up from just $3,000 in the 12 months preceding June 2016.

Germany-based Aldi ranked No. 2 with $441,000 spent on the keyword group -- up from $40,000 spent during the preceding 12-month period — as the grocer began ramping up its presence in the U.S. and online.

AdGooroo also examined advertisers’ percentage of share for total clicks on the 124 grocery keywords from June 2016 through May 2017. In this category, Walmart led all advertisers, capturing a 19.1% share of total clicks on the 124 non-branded grocery keywords over the 12-month period, followed by Aldi at 11.6% click share, Kroger at 7.6% click share, Safeway at 6.7% click share, and Fry’s at 4.2% click share.

Amazon ranked No. 9 in ad spend on the non-branded grocery keyword group, spending $134,000 from June 2016 through May 2017, and No. 9 in clicks with a 2.8% click share.

Whole Foods ranked No. 18 in ad spend with $51,000 spent on the keyword group over the last 12 months, down from the $57,000 the company spent on the same keywords from June 2015-May 2016 — and No 19 in clicks with a 1.2% click share.


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