Amazon sellers struggling to grow their business are buying Google ads

(Bloomberg) — Great Oral Health sells dental products on Amazon.com Inc. for almost a decade, purchasing advertising from the e-commerce giant to stand out in a vast marketplace. Recently, however, the company has noticed that spending more on Amazon ads does little to attract new customers.

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So it turned to another well-known advertising company: Alphabet Inc.’s Google.

Shoppers find Great Oral Health ads on Google when searching for solutions to bad breath, gum disease and other ailments. The results direct them to the company’s oral probiotic on Amazon, which actually pays sellers to attract customers from other sites because they would rather keep their business than lose it to Walmart.com or another competitor.

Amazon sellers have long used Google to drive customers to their websites, with varying degrees of success. Now, new third-party software is helping them direct Google users to Amazon, where they can shop conveniently. Sellers say this technique increases sales and improves their profits because Google ads are typically cheaper than Amazon ads. The credit Amazon pays for external traffic – typically 10% of the product price – sweetens the deal.

“Amazon knows that Google is a monster and all the buyers are walking down these aisles,” said Ryan Duminy, a consultant at Bullseye Sellers who manages advertising for Great Oral Health.

Amazon has been selling advertising for more than a decade, despite initial concerns that it could ruin the shopping experience. Today, the Seattle-based company is a major player in an industry that generated $47 billion in advertising revenue last year. But it’s becoming increasingly difficult to stand out in Amazon’s cluttered online store, prompting sellers and brands to look for marketing alternatives.

Google, which has long struggled to become the place to shop, is happy to help. In an effort to attract consumers affected by inflation, the search engine giant released a deal search tool in the fall. Earlier this month, Google said it was beta testing new features that let brands upload short videos that show up in Google search results.

But what really changed the game for Amazon sellers was the emergence of startups like Toronto-based Carbon6 and Seattle-based Ampd, which have developed algorithms that enable Google search queries for customers looking to buy. Users can be targeted by age, marital status and income, metrics that can be used to calculate how likely they are to make a purchase. The software also filters out information seekers who may not be ready to pull the trigger.

“The really big breakthrough is targeting ads to potential buyers on Google and sending them to Amazon,” said Tim Jordan, director of community at Carbon6, whose PixelMe software helps companies improve their Google marketing campaigns. “If you send a lot of traffic from Google to Amazon and those people don’t buy, it’s bad traffic. You don’t make any money.”

The Jungle Scout report shows that over 70% of all purchases made on Amazon by customers directed there by Google ads are the brand’s first purchase, making it a valuable channel for acquiring new customers. The report found that more than a third of Amazon sellers said that driving traffic to their Amazon products from third-party sites like Google is a priority this year.

In an emailed statement, Amazon said it helps sellers reach consumers through a variety of advertising initiatives, which are constantly expanding. “One of these options is the Brand Referral Rewards program, which helps brands improve the effectiveness of their off-Amazon marketing campaigns.” Ampd, which says on its website that its software has directed 12 million Google users to Amazon, declined to comment.

Software tools typically make the most financial sense for mid- to high-priced products because keyword costs are not closely tied to product price. If a seller selling a $50 item on Amazon buys a Google search term for $5 or less, it’s essentially a free ad buy because Amazon gives them $5 for referring the traffic.

Online retailers are also responding to a dramatic shift in consumer behavior. As recently as 2022, nearly 52% of U.S. shopping trips began on online platforms such as Amazon.com, according to an annual survey conducted by EMarketer. Last year, only 40% of purchases started there. Nearly 30% of shoppers started their purchases on search engines like Google, up from 25% the previous year.

EMarketer analyst Sky Canaves says bargain-hunting shoppers are hopping over sites rather than limiting themselves to one market. She said the proliferation of ads on Amazon also makes it harder for them to find what they want. “Consumers want to save money and save money wherever they can,” Canaves said. “They may find it easier to compare prices and find deals among retailers using a search engine than on marketplaces.”

As more and more shoppers use search engines to find products, Amazon sellers should advertise there.