Why does Amazon spend the most on Google advertisements?

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Amazon is the highest spender on advertising through Google’s search platform

Earlier in the series, we discussed how Amazon (AMZN) and Facebook (FB) are planning to take away some online advertising business from Google (GOOG)(GOOGL) with their own product offerings.

Yet Amazon is also helping Google in a way—giving Google business by advertising its own products on Google’s search platform. According to a report from Ad Age DataCenter’s first ranking based on data from Adgooroo, a Kantar Media company, Amazon spent $157.7 million on ads through Google’s search platform in 2013.

As the chart below shows, Priceline (PCLN) is the next highest spender on Google ads, but it spends almost half of what Amazon spends. AT&T (T), Expedia (EXPE), and Microsoft (MSFT) are some of the other players in the list of the top five companies in terms of spending.

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Product listing ads on Google are driving e-commerce sales

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Product listing ads (or PLAs) are the ads that appear alongside a search query that contain a picture of a product along with price details. These ads link directly to the product page of the e-commerce site, where the user can shop online. These ads have proven to be more successful than traditional text-driven ads.

According to a report from eMarketer, PLAs’ share of Google’s paid search clicks among all U.S. retail sites has increased from 19% in 2Q12 to 50% in 2Q14 for non-branded retail searches and from 12% to 26% for overall retail searches during the same period.

Amazon directly benefits from PLAs on Google, which explains why it’s the highest ad spender on the search market leader’s platform.

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