Amazon Cut Spending on Google Advertising in Recent Days

(Bloomberg) -- Amazon.com Inc. has slashed the amount of money it spends on Google advertising in recent days, a potential blow to the search giant’s revenue at an already-unstable time.

The e-commerce company generally buys Google ads to funnel web shoppers to its online store. But since March 11, Amazon has cut back drastically across nearly all categories, according to data collected by Tinuiti Inc., a marketing agency that handles about $1.5 billion a year in spending for various advertisers.

“Amazon has significantly pulled back in Google Shopping and text ads,” said Andy Taylor, Tinuiti’s director of research. In Google keyword auctions, Amazon is still bidding “lightly” against some advertisers, but it has “disappeared as a competitor altogether for others,” he added.

“While we don’t comment on individual customers, it’s not unusual for advertisers to adjust their campaigns at any time for any number of reasons,” a Google spokesperson said. An Amazon spokesperson did not return a request for comment.

Amazon is responding to a surge in demand for everyday items as people avoid physical stores because of the coronavirus pandemic. The company is prioritizing the stocking of household and medical supplies and is looking to hire 100,000 extra workers. Amazon could be cutting back on ads because it doesn’t want to push even more people to its website and overload its supply chain, warehouses and logistics network.

“They don’t need to drive more demand,” said Travis Johnson, global chief executive officer of Podean, a marketing firm that specializes in helping companies advertise on Amazon and other digital marketplaces. Some of his clients have seen sales on Amazon.com spike as much as six times this month, compared to February, he said.

The pandemic may curb Google’s ad revenue growth as economic activity slows and companies look for ways to cut costs. Online travel agencies Expedia Group Inc. and Booking Holdings Inc., which are major Google ad buyers, have been particularly hard hit since global travel almost ground to a halt a few weeks ago.

In China, where the virus spread first, online ad spending will grow this year at the slowest pace since 2011, research firm EMarketer said Tuesday.

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