A collective shudder rolled through the shoulders of the paid search industry at the end of December as news spread of Amazon’s move to begin competing in Google Shopping, also known as Product Listing Ads (PLA). As the largest American online retailer, Amazon is uniquely positioned to drive significant competitive changes simply by entering an ad space, and many brands advertising through PLAs rightly fear that there will be significant negative effects on business as a result of this change.
Digging into the Google Auction Insights data, it seems Amazon is much more competitive in phone and tablet Google Shopping results than it is on desktop, a trend not observed for text ads. This may be because phones are the largest and fastest growing segment of PLA traffic, drawing Amazon’s initial focus. It could also be Amazon's response to fading organic search growth on phones driven by Google updates in recent years.
Amazon Impression Share Higher on Mobile Devices
Marketers can identify when Amazon is directly competing with their brand in Google Shopping through AdWords Auction Insights reports, which detail which competitors are appearing in paid results for the same search queries as an advertiser. While, in December, Amazon’s presence in these reports was limited to a handful of advertisers that focused on home goods products, it rapidly expanded in January and Amazon is now a competitive presence for most brands with any connection to home goods.
Brands that now see Amazon competing against them in Google Shopping find that Amazon’s impression share is higher on phones and tablets than desktop – a fact that is true for every single advertiser studied. Below is a table of the median value by week for Amazon’s PLA impression share against individual retailers, showing that the median Amazon competitor consistently finds that Amazon has a higher impression share on phones.
Note: In Google’s Auction Insights Report, competitor impression share is populated as ‘<10%’ if the value is less than 10%.
Some brands with Amazon as a competitor find that Amazon does not appear in desktop Auction Insights at all. While the median Amazon PLA impression share was <10% for both tablets and desktop for a couple of weeks in the sample, there isn’t a single retailer that found Amazon’s desktop impression share higher than that of tablet devices in any given week.
Given that different device types display PLAs in different bundles, it could be possible that device impression share is impacted by the number of impressions available for different devices and what that does to the competitive landscape. If there are fewer possible impressions on one device, the vast majority of brands would have a lower impression share for that device type and vice versa.
However, Google Shopping impression share for the Merkle advertisers studied is very similar across all three device types, indicating that the differences by device in Amazon’s impression share are the direct result of its bidding strategy.
Taking a look at Amazon’s text ad impression share, we find that its presence on phones is often the weakest of the three device types. However, we find the same is true for Merkle advertisers, which likely reflects that these differences are indeed caused by differences in the number of total ad impressions for each device type rather than bidding strategy. Bottom line, we don’t see the type of higher Amazon impression share on phones with text ads that we find for Google PLAs.
Thus, it appears that Amazon is in fact focusing its Google Shopping efforts on phones in a different strategy than it uses for text ads.
Why Might Amazon Focus on Mobile Google Shopping?
As shown in the Q4 Merkle Digital Marketing Report, phone PLA spend grew 61% Y/Y, driven entirely by click growth, and phones accounted for 56% of all PLA traffic in Q4. In the bigger picture, phone PLAs accounted for over a quarter of all Q4 search traffic for retailers.
Thus, Amazon may just be more aggressive on mobile because phones already account for a majority of PLA traffic and consistently far outpace other device types in Y/Y growth.
It’s also possible that Amazon drives more incremental value out of phone ads than desktop ads. With a very strong organic search presence covering a huge variety of product categories, Amazon likely does quite well in getting traffic to its site through organic results. However, Google doubled the maximum number of text ads shown above organic results on phones between mid-2014 and mid-2016 from two to four, and also doubled the size of PLAs in the second half of 2015.
These changes along with other updates sent formerly robust mobile organic traffic growth tumbling for several quarters, until a recent rebound over the course of the second half of 2016.
Perhaps Amazon felt the impact of this trend, and is focusing on mobile PLAs as a result.
Want to Fight Back? Optimize Google Shopping Campaigns and Feeds
Online retailers should rightly be concerned that Amazon’s focus on mobile PLAs and rapid expansion into auctions against more advertisers will hinder paid search growth moving forward. It remains to be seen how many product categories Amazon intends to include in its PLA program, but given its expansive product selection, the potential exists for massive disruption in many Google Shopping auctions.
There really aren’t many ways advertisers can steel themselves for Amazon’s PLA expansion, other than to optimize product feeds and PLA campaigns as effectively as possible.
Advertisers should test to ensure all feed fields such as product title, price and description are optimized, as well as stay up-to-date with product updates to ensure that feeds aren’t rejected on Google’s end for errors. Disapproved feeds can result in Google Shopping campaign suspension, and ads that aren’t eligible to run obviously can’t compete with Amazon.
Marketers should use negative keywords and Google Shopping campaign priority to funnel traffic to the correct product-bid combinations, and advertisers need to be segmenting traffic by important query attributes, such as when a brand name is included in the query.
The best offense is a well-oiled Google Shopping program that eliminates irrelevant traffic and allocates spend as effectively as possible. Amazon is on the move. Be ready.