Behind Amazon Ad Numbers: Formulas Like Those Google Used To Create Ad Empire

Amazon has seen an increase in impression share for products running product listing ads (PLAs) in Google Search for most categories such as Tools, Apparel, Cosmetics, Gifting, Shoes, and Pet Supplies. 

Of the 100 people who viewed PLAs in October 2019 across Google Search within the category of Tools, an Amazon-related PLA ad served up 75% of the time -- up from 48% in April 2019, according to data released from NetElixir on Wednesday.

The numbers show Amazon is making a greater investment in PLA ads running on Google to gain a higher share of impressions, said Udayan Bose, CEO at NetElixir. “To gain this much impression share, they are spending a tremendous amount of money,” he said.

Bose said that for every incremental percentage-point gain the brand likely will spend between $10,000 and $15,000.

“It appears they are buying PLAs mostly for non-branded keywords, but they seem to be present in every category.”

In the apparel category, for example, Amazon impression share for PLAs across Google rose from 50% in April to 73% in October. Shoes rose from 45% in April to 72% in October. Pet supplies rose from 41% in April to 64% in October.

Amazon isn’t only buying PLAs for brands that sell products on its marketplace, but also its own branded products.

It appears that Amazon is funneling traffic through PLA ads on Google to its own marketplace, where it also sells ads. Amazon then makes money on the PLAs running on Google Search as well as on the ads running across their marketplace. The margins suffer for brands because Amazon takes a 15% cut for selling products on the site, Bose said. 

Google faced a backlash years ago for a similar double-dip strategy. 

“We have observed that from the time a merchant starts selling on Amazon, within a week Amazon starts advertising on the merchant's trademark keywords and top products,” he said. “Amazon also ranks very high in organic listings for the merchant's trademark keywords.”

Through a combination of its aggressive paid-search strategy and high organic rankings, Bose said, Amazon can squeeze the advertiser to pay a higher CPC and lure them into advertising on the marketplace through this strategy. It also pushes merchants to sell more on Amazon, since their website sales are impacted.

"In many cases brands can only advertise on the higher-priced items," Bose said. 

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