Amazon Stops Spending on Google Shopping Ads, Boosts Rivals

Amazon has reportedly stopped spending on Google Shopping ads, citing unclear reasons. This has created opportunities for competitors like Walmart, Target, and Home Depot, which have boosted their impression share by up to 20% and seen cost-per-click rates drop. Analysts have a Strong Buy consensus rating on Amazon stock with a $259.39 price target, implying 12.6% upside potential.

Amazon's sudden withdrawal from Google Shopping ads has sent shockwaves through the retail media landscape. Over the span of 48 hours, from July 21 to 23, 2025, Amazon ceased its presence in Google Shopping ads across major markets, including the United States, United Kingdom, Germany, Japan, and others. This strategic move has led to a significant shift in auction dynamics and competitive landscape.

Amazon's exit resulted in a dramatic drop in its impression share from as high as 60 percent to zero in key territories. Digital marketing teams at Merkle and Tinuiti first detected the change, which was later corroborated by MediaRadar and SMEC’s auction data. While Amazon remains on Google’s standard Search ads, its Shopping ads, which feature image ads for product comparison, are now completely absent.

Why Amazon’s Exit Matters

The immediate impact of Amazon's exit is evident in the competitive landscape. Brands like Walmart, Target, and Home Depot have quickly gained up to 20 percent more impression share. Cost-per-click (CPC) rates reportedly dropped by 1–4 percent on average, though significant further declines depend on Amazon staying away. Merchant Center listings have also been affected, with some advertisers reporting that Amazon no longer appears in free listings, hinting at a possible full disconnect from Google’s Merchant Center.

Strategic Motives Underpinning the Decision

While Amazon has not clearly explained its rationale, several strategic motives have been proposed by experts:

1. Incrementality Test: Amazon may be conducting an incrementality test similar to experiments during 2020 to assess whether Google Shopping spend actually delivers incremental value.
2. Margin Optimization: By shifting customer acquisition to internal channels, Amazon could be avoiding fees paid to a competitor platform.
3. Negotiation Play: Amazon's exit could be a negotiating tactic to pressure Google on terms related to data access or ad pricing.
4. AI-Powered Commerce Search: Amazon's move could be part of its broader strategy to own the full funnel—from search to recommendation—advancing its strategic autonomy in AI-powered commerce search.

Broader Implications for Retailers and Brands

The exit has created new opportunities for retailers and brands. Lower CPCs and higher visibility have been observed, though much of this benefit may still go to large retail brands. This presents a window for brands to test direct channels and build first-party data strategies. Amazon is likely redirecting its budget into its own ecosystem, increasing pressure on brand and seller advertising spend elsewhere.

Investment Implications

Amazon's strategic retreat is more than just a temporary pause; it could signal long-term changes in how Amazon approaches search and customer acquisition. Retailers now face a choice: continue fueling external systems like Google or invest in building owned, AI-enabled customer funnels.

Analysts have a strong consensus rating on Amazon stock, with a $259.39 price target, implying a 12.6 percent upside potential. This reflects the market's optimism about Amazon's ability to navigate the changing retail landscape and capitalize on new opportunities.

Conclusion

Amazon's exit from Google Shopping ads has significant implications for both retailers and investors. While the immediate impact is evident in the competitive landscape, the long-term effects remain to be seen. Retailers and brands must adapt their strategies to capitalize on the new opportunities created by Amazon's move. Investors should closely monitor Amazon's strategic decisions and their impact on the company's financial performance.

References:

[1] https://www.adgully.com/post/4594/amazons-sudden-exit-from-google-shopping-ads-sends-shockwaves-through-retail-media
[2] https://www.marketbeat.com/instant-alerts/filing-tower-bridge-advisors-sells-688-shares-of-the-home-depot-inc-nysehd-2025-07-30/