Robert Frost once wrote, “So dawn goes down to day, Nothing gold can stay”. It appears that the end may be around the corner for a once valuable partnership. Amazon and Google have worked together in the past, but as Amazon grows, it may be seeking to be more independent in the internet marketing. From display ads to top level domains, a series of announcements and rumors from the past month show a changing dynamic between Google and Amazon, where competition overtakes cooperation.
For years, Google and Amazon have benefited one another by having Amazon products listed on Google’s ad network. An analysis from SearchEngineLand found that between 1.8 and 2.5 percent of Google paid search clicks come from Amazon ads. This may seem like a small portion, but given the size of Google’s ad network, it’s impressive for any one company to account for a noticeable percentage.
The value of this arrangement is underscored by another study. Ad Age partnered with AdGooroo to gather data on Google partner spending. They found that Amazon spent $157.7 million on Google U.S. search ads in 2013, which was by far the most by any company. Since Amazon is a retailer, this massive ad buy could only be a sign that they felt Google ads were a value to them.
Amazon has been strengthen its online ad capabilities for a while now, but the biggest sign of trouble on the horizon came last month from the Wall Street Journal, who reported that Amazon may soon leave the Google ad network completely. The move wouldn’t significantly affect Google’s revenue, as the percentages above show, but it would be a symbolic blow to search giant.
Amazon will replace their ads on the Google Search Network with their own in-house ad network. This plan would have multiple benefits for Amazon if it worked. It would greatly increase the revenue they earn from each sale since they wouldn’t have to pay Google. There is also a value to getting a product ad featured on Amazon. Amazon traffic doesn’t perform as well as Google.com traffic in converting clicks into revenue, but it still performs better than the run-of-the-mill search partner traffic. According to the analysis from SearchEngineLand, last month, revenue per click for non-branded search partner traffic from Amazon was about 26 percent lower than the revenue per click for Google non-brand overall, however it was 33 percent lower for other search partners.
Even if Amazon doesn’t rival Google in terms of network size, it may offer Google some competition in retail data. This may give an Amazon better tools for targeting ads and to sway some advertisers to move some of their ad budget to the Amazon platform.
Amazon and Google have also come into direct competition in an auction to acquire the rights to one of the new Top Level Domain. Amazon is paying nearly $4.6 million for the top-level .buy domain, beating out a bid from Google. This is the second TLD auction Google lost recently. Another company won the bid for the .tech TLD with $6.7 million, which Google also tried to acquire. It makes one wonder how serious Google is about their plan to register TLDs as part of their business model, as was discussed in a previous article on this site. They could easily have one these bids if they had wanted to.
Amazon’s purchase of .buy is also ironic since it probably wasn’t their first choice. Amazon tried to register a .amazon domain, but it will most likely be rejected because countries with the actual Amazon river convinced the ICANN the geographical region was more deserving of the domain than a company who happened to have the same name.
It is likely that as Amazon continues to grow, the company will go head to head with Google. Though Amazon lacks the size to challenge Google on every front, there’s good reason to think that on certain battlefields, Amazon can prevail. In general, competition is good for consumers because it leads to new innovation and better products. Marketers should be on the look out to see if the competition from Google and Amazon provides them with new opportunities to reach audiences and sell products online.
For more information on the power of Google, read this article with seven stats about Amazon that will make you want to enter the jungle.