Amazon Drops Product Ads

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Amazon is changing its online advertising policy, which could have a big impact on retailers not distributing their products through the eCommerce marketplace. We consider the implications for advertisers and retailers.

Amazon announced to clients by email in early August that it is discontinuing Amazon Product Ads effective October 31, 2015. Advertisers need to use all promotion credit by that date or miss out. Performance reports will remain accessible until the end of the year.

The message went on to subtly promote Amazon’s Seller Support, and to ask the advertiser if they would be interested in selling their products on Amazon.

The Product Ads allowed businesses to advertise their products on Amazon’s website and drive shoppers to the retailers or manufacturers own site. This latest move sends a clear message - if you are not an Amazon reseller then you can’t advertise on the site.

It has been estimated that Amazon’s online advertising business could total $1.26 billion this year, rising to $1.83 billion by 2018.

Online Retailer Reaction

Naturally, online retailers have been disappointed by the news. Consumers are referencing eCommerce sites more and more for product research, with sites such as Amazon a common starting point in the online retail journey. A recent survey by Amazon and found that 64% of users begin searching for a product on a marketplace.

Whether this is a calculated move by Amazon to take on Google Shopping remains to be seen. Amazon has shied away from advertising itself on the Google Shopping platform and this could well be a move to bolster its own retailer portfolio.

However, online advertisers not using an online marketplace to push their products may need to rethink their strategy.

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