Media Update: Amazon Abruptly Exits Google Shopping Auctions
What’s in store
- Featured story: Amazon abruptly exits Google Shopping auctions
- Our Take On the News
- Helpful Links & Resources
Featured Story: Amazon Abruptly Exits Google Shopping Auctions
In a significant market recalibration, Amazon has completely withdrawn all advertising activity from Google Shopping auctions in major markets as of late July 2025. This event, first observed by our research team, marks a pivotal moment that is forcing advertisers to critically re-evaluate their paid search strategies. While there is historical precedent for such a move, notably Amazon’s three-month-long withdrawal in 2020 to prioritize essential items and relieve pressure on its fulfillment network, the current context suggests a more nuanced and strategically driven decision.
The immediate aftermath of Amazon’s departure from its median 60% impression share within Google Shopping auctions has been a swift rebalancing of auction dynamics. The initial market expectation was a corresponding decline in Cost-Per-Click (CPC) rates; however, this impact has proven to be short-lived. The net effect has been a rapid absorption of the vacated inventory by other major retailers, such as Walmart, Target, and Home Depot, which have aggressively increased their spending to capitalize on the perceived headroom opportunity. This intensified competition has, in fact, led to an unexpected increase in CPCs for many advertisers, contrary to initial market expectations.
This shift presents a critical challenge and a distinct opportunity. While the rise in CPCs due to heightened competition may seem to negate the benefits of Amazon’s absence, the strategic window for brands to capture market share, lower customer acquisition costs, and drive click growth remains open. The duration of this window is uncertain, but it is considered a short-term opportunity for advertisers to gain a competitive edge before Amazon potentially returns to the auctions.
So, what is the strategic calculus behind Amazon’s move? While the definitive reasons are known only to Amazon, speculation points to several scenarios beyond the operational constraints of their 2020 pause.
- Incrementality Testing: One possibility is a form of incrementality testing, where Amazon is evaluating whether its Google Shopping ads are driving truly incremental sales or merely cannibalizing existing organic traffic. This is likely a stretch, as Amazon possesses the sophistication to test incrementality within specific categories without impacting its entire ad ecosystem.
- Margin Optimization: Another scenario revolves around margin optimization, with Amazon seeking to internalize customer acquisition costs by directing traffic to its own platform and leveraging its powerful internal ad platforms and first-party data.
- Austerity Measures: Given the timing of this pause slightly ahead of Amazon’s latest earnings announcement that left some investors concerned about limited AWS growth, is this a means of cost cutting in order to offset slowed growth & increased investment in AI? This seems unlikely given the transparency to investors that reduced advertising opex has no direct bearing on AWS growth or margins. (It’s important to recognize the arbitrage value of Google-derived traffic for Amazon. While specific returns are proprietary, it’s a fair assumption that Amazon’s internal ad inventory generates more revenue than the cost of customer acquisition, without even factoring in the direct transaction ROAS.)
- A Negotiation Tactic: This withdrawal could also be a negotiation tactic, using the absence of millions in ad spend to pressure Google for reduced fees or more favorable terms, especially as Google looks to show investors the resilience of its search advertising business in the face of AI-enabled search functions.
- AI Search Turf War: Most forward-looking, however, is the notion of an “AI search turf war.” Amazon, with its Rufus AI shopping assistant, may be signaling a strategic shift towards “full-funnel control” and direct customer acquisition, moving away from relying on Google’s generative AI-powered funnels. This aligns with a broader industry trend where brands are focusing on Retail Media Networks (RMNs), which offer superior return on ad spend (ROAS) and closed-loop measurement capabilities via first-party data. This move could be indicative of a reallocation of budget from traditional search advertising to RMNs, where Amazon is a leading player.
This moment is not about simply watching a giant step away; it is about recognizing the strategic complexities and acting decisively. While Amazon’s full withdrawal is unlikely to be permanent, it is entirely possible it will not return with the same level of investment across all product categories. This presents a rare, if temporary, opportunity for brands to redefine their market presence and establish a new competitive equilibrium. | Media Post, Digiday
What We’re Tracking
The news stories we’re tracking that are likely to impact advertisers in the month ahead.
U.S. Economy & Tariffs
- Tariffs are impacting the U.S. economy: Multiple reports this week have highlighted that U.S. companies and consumers, not foreign firms, are bearing the costs of new tariffs. The tariffs are noted as a factor scrambling economic data, influencing inflation, and leading to a fraying consensus at the Federal Reserve. | Bloomberg, The New York Times
- Mixed economic signals: While jobless claims fell for a sixth consecutive week and consumer confidence improved in July, the overall economic picture is complex. The U.S. economy’s growth slowed in the first half of 2025, and a key inflation measure rose in June. The July jobs report showed a significant pullback in hiring, with only 73,000 new jobs added, and revisions to previous months painted a much weaker portrait of the labor market. | Bloomberg
- The Federal Reserve and inflation: The Fed held interest rates steady, but two officials dissented, backing a rate cut. The debate among policymakers is centered on the effects of the tariffs on the economy and inflation. | Bloomberg
Tech Giants & Platforms
- Google’s evolving search and AI strategy: Google’s Q2 earnings showed that AI is not “killing” search but may be doing the opposite, with AI Overviews increasing search activity. The company is also testing new features to “organize” the internet and provide a more personalized search experience, while simultaneously facing scrutiny from marketers who are not convinced by its new channel-level reporting for Performance Max. | Alphabet Investor Relations
- Microsoft’s strong earnings and growing market share: Microsoft closed its FY 2025 with strong earnings, both quarterly and annually, with gains primarily attributed to Cloud and AI enhancements. Search and news advertising revenue (excluding traffic acquisition costs) increased 21% quarterly, while Bing’s search engine market share has grown over the last two years, specifically on desktop devices. This growth is largely due to innovations like Copilot Search in Bing and the ability for Bing to power web search for third-party chatbots like ChatGPT and Meta AI. | Microsoft Investor Relations
- Meta’s legal and financial status: Meta shares jumped after a strong Q2 sales forecast, a sign that its advertising business is growing fast enough to support its aggressive spending on AI. | Bloomberg
- Antitrust and privacy lawsuits: Google lost its appeal in an antitrust case filed by Epic Games over its app store policies; the ruling requires Google to make sweeping changes to the Google Play Store. Separately, a federal judge ruled that LiveRamp must face privacy claims in a lawsuit alleging the company created “cradle-to-grave” profiles of users by combining online and offline data. | The Verge
Media & Advertising
- Measurement and Sports Sponsorships: We’ve often used this space to discuss publishers’ prioritization of live sports content to maintain and grow relevance, but marketers are not fully bought in. Per Forrester, more than three quarters of marketers had difficulty determining ROAS from their sports investments – even as they moved to increase spend. Advertisers and publishers are using a variety of tools to close the gap, including shoppable ad formats, retargeting campaigns, and brand lift studies. Tinuiti has long recognized this potential gap in upper-funnel measurement, which contributed to development of our Brand Equity tool. | Digiday
- The rise of YouTube and Connected TV (CTV): Google’s earnings last week highlighted YouTube as a key growth driver, with revenue increasing 13% year-over-year to $9.8 billion. This momentum was fueled by two main factors: the rise of CTV ad formats—such as QR codes and Send to Phone, which have driven over one billion conversions—and the strong performance of YouTube Shorts, now generating revenue per watch hour comparable to, or even exceeding, traditional in-stream video. YouTube continues to evolve into a powerful, integrated platform that brings together streaming, social, search, audio, and influencer content and across devices—enabling advertisers to engage audiences across the entire consumer journey. | Alphabet Investor Relations
Helpful Links & Resources
- Apple’s new ‘Answers’ team is developing a stripped down ChatGPT experience | Mashable
- Is It Still Disney Magic If It’s AI? | WSJ
- Spotify’s Crown Lies Heavy, But It’s Still the Streaming King | WSJ
- Podcasts Become a Strategic IP Play for Hollywood Talent | Digiday
- Google is slowly opening its black box — but marketers aren’t so convinced | Digiday
- Is AI Killing Google Search? It Might Be Doing the Opposite | WSJ
- Google Hits Back At Pew Report | Media Post
- Google Breaks Traditional Search Model By Organizing Internet Results | Media Post
- Microsoft Bing Market Share Grows As Google’s Slightly Declines | Media Post
- Amazon to Cut Wondery Staff, Reorganize Audio Business | Bloomberg
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