Amazon Denies It Is Being Eclipsed By Google's New Shopping Ads

Larry page jeff bezosWikimedia, CCAmazon CEO Jeff Bezos and Google CEO Larry Page

Google appears to have won a huge victory over Amazon’s subsidiary brands in the online shopping wars, at least according to Brian Pitz and his team of analysts at Jefferies Research: The number of Amazon-owned brands’ shopping ads running on Google has nearly tripled, and Amazon brands have doubled their market share of Google shopping ads, in just the last six months, Jefferies says.

Amazon, however, denies the Jefferies analysis and says Amazon itself hasn’t bought any of the new-format ads: “It is dead wrong and not true,” an Amazon spokesperson told Business Insider of the ads. “We haven’t bought any PLAs. Jefferies is just wrong.”*

In an email to Business Insider, the Jefferies team indicates that as “Amazon” it includes ads from brands owned by Amazon, which includes Zappos,, and

The disagreement comes after Google introduced a new search product that — a cynic might argue — was deliberately designed to screw Amazon out of its high-ranking organic (unpaid) search results.

Late last year, Google introduced a new paid advertising format. Whenever Google figured you were searching for something shopping-related, say “Ugg Boots,” it displayed so-called “product-listing ads” (PLAs) instead of regular text links.

Those links look like this, in this graphic Jefferies produced in the summer of 2013:

Any online retailer can buy them. When used correctly, they display retailers wares in big, clickable boxes on top of the free organic results. Google’s other search ads are off to the side, and are slightly less visible.

Jefferies says PLAs bring in $US9 in sales for every $US1 they cost.

In the early part of 2013, Amazon’s search results were pushed down to less visible areas of Google’s pages, Jefferies’ notes say. In June, Amazon was only the 11th biggest user of PLAs. It ran 1,752 of them, according to Jefferies’ sample of 150,000 searches, and about 1% of all PLAs displayed by Google were for Amazon.

However, Amazon says the entire basis of Jefferies report is wrong: “It’s wrong,” spokesperson Craig Berman tells us. Berman says Amazon doesn’t know where Jefferies’ information comes from, but that Amazon doesn’t buy any PLA ads from Google. The Jefferies teams tells us that the ads are “not Amazon proper,” but coming from the subsidiary brands acquired by Amazon.

Back in the summer, Business Insider noted that the ads were a huge threat to Amazon precisely because they moved Amazon’s normally very good search results down the page in favour of any retailer who paid to appear above them.

Fast-forward to November — the crucial post-Thanksgiving/pre-Xmas holiday shopping period — and Amazon brands were the No. 7 user of PLAs, Jefferies’ most recent note says. In the sample, Amazon had 5,232 ads, about 2% of all PLA inventory:

Amazon, again, says these data are simply inaccurate. But Jefferies believes that PLAs will boost Google’s coffers in Q4:

In the US, the number of Product Listing Advertisements has increased 99% Y/Y to 236K — the most ever. In the UK, the number of PLA ads increased +130% Y/Y since March as we tracked 198K PLAs in our current study — again, the most ever.

… Given our findings, we think Product Listing Ad (PLA) format could drive upside during the important holiday quarter because PLAs generate more revenue for Google compared to the legacy text-based ‘blue link’ search ads.

Here’s what the increase in PLAs on Google looks like over time (below). Nearly 40% of search results in the sample now lead to a PLA:

Clarification: The original version of this story did not include comments from Amazon, or Jefferies response to Amazon’s criticism.

Disclosure: The author owns Google stock.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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