Insights

How Businesses Should Be Thinking About Google and Amazon Advertising

Amazon ads Google ads platforms Since Amazon launched its advertising capabilities, businesses and marketers alike have wondered how it would compete against Google’s solidified online advertising platform, Google Ads. Now that almost half of U.S. online shoppers begin product searches on Amazon, versus only 35% on Google, there’s good reason to question whether Amazon Advertising will overtake Google Ads within a few years.

While making up only 2.5% of the online advertising marketplace, Amazon’s ad platform is worth $125 billion and Digiday expects it to grow 40% in the next year. As Amazon continues to offer more and more existing Google Ads capabilities like video and display ads, some have wondered if Amazon’s plan is to quickly adopt existing ad buying methods and supplement them with their unmatched customer data, to ultimately create an ad-buying platform that can’t be beat.
Google has also expanded their offerings to mirror Amazon’s. Google recently announced dynamic prospecting, which uses a business’s product feed to show relevant products to shoppers based on their past interactions across Google and other publisher sites. Considering sponsored products are one of Amazon’s most popular ad types, Google’s expansion into this space can be interpreted as a direct response to Amazon’s success.

The ever-expanding capabilities of both platforms leaves businesses wringing their hands wondering which is the better investment. However, the importance of Google Ads and Amazon Advertising to your business lies not in their market share or capabilities, but in their overall function.

It’s important to first break down how each ad platform operates, and what goals those offerings serve.

How The Google and Amazon Ad Platforms Works

While Google Ads and Amazon share most ad formats and auction styles, they differ in their core function and ranking strategy. Google’s primary function as a search engine is to get a searcher to click through to a different website, whereas Amazon’s functionality relies on a searcher to remain on the Amazon site and purchase through Amazon. This functionality directly informs each ad platform’s ranking strategy. While Google’s ad rank relies heavily on click through rate (CTR), Amazon ranks ads primarily off their revenue. Knowing this, businesses can capitalize on the differences between the two for a better targeted advertising strategy.

Customers use Google as an entry-point to learn about products, businesses, and general information, which makes their advertising platform most effective for targeting your top of funnel audience. Using Google Ads campaigns to drive awareness of your products and services makes best use of the platform’s strengths, while still generating new traffic and retaining existing customers. Google’s platform will maintain their evergreen relevance, as 81% of customers use search engines to conduct research before making a purchase. Not to mention, using Google Ads will continue to be a primary strategic tactic for capturing the interest of Research Online, Purchase Offline (ROPO) customers. With 82% of smartphone users consulting their phones before making purchases in-store, having visibility on Google will continue to be crucial.

Amazon, on the other hand, is best for targeting customers who have already done their research and are ready to make a purchase. In fact, Amazon ads on average have a 10% conversion rate, compared to 1-2% on Google. Since Amazon is in fact, a marketplace, it makes sense that its ads are better tailored for your bottom of funnel, ready-to-purchase customers. Plus, Amazon has recently begun using pixels to track a customer’s behavior from clicking on the ad through purchase, which can provide data on user behavior, demographics, geographical location, and more, to better tailor your efforts.

Allocating Ad Spend Budget

The amount of your budget you allocate to each platform depends entirely on your business goals for that period of time. If you’re mostly focused on expanding your target audience or introducing a new product line, Google will be your best bet. If you’re more focused on pushing sales and proving ROI, Amazon can get you the numbers you need.

“An ideal online advertising strategy would use Google Ads for awareness and Amazon Ads for conversion. Determine your top performing products from previous Google Shopping campaigns if possible and then advertise those products in Amazon Ads in a sponsored products campaign.” -Lauren Ganley, Paid Search Strategist

The marketplace of online advertising platforms is ever-changing and constantly expanding; while sometimes overwhelming, it’s more opportunity to get the right products in front of the right customers, at the right time. Your best approach to capitalizing on the opportunities is not choosing one over the other, but understanding each platform’s strengths and dividing your efforts where they make the most sense. Much like radio or television in traditional advertising, online advertising is beginning to offer multiple channels and you’re smart to take advantage of them all.