Amazon’s Ad Uprising

Advertisers are starting to shift spending on search ads from Alphabet Inc.’s Google toward Amazon.com Inc., a sign of how the online retailer is capitalizing on becoming the top destination for consumers’ product searches.

WPP PLC, the world’s largest ad buyer, spent about $300 million on behalf of its clients on Amazon search ads last year, and about 75% of that money came from Google search budgets, according to people familiar with the matter. It spent between $100 million and $150 million on Amazon search in 2017, the people said. WPP spent north of $3 billion globally on Google search advertising last year, one of the people said.

Omnicom Group Inc., another Madison Avenue giant, said between 20% and 30% of the dollars its clients spent on search advertising last year went to Amazon search ads, with the majority of the cash shifted from Google search budgets. The New York ad company spent about $1.2 billion on U.S. search ads last year, according to people familiar with its ad spending.

Amazon still has a long way to go to catch Google, which had 78% of the $44.2 billion U.S. search-ad market in 2018, according to research firm eMarketer. But the shift in spending follows a major change in shopper behavior: While Google has long been the dominant player in online searches of all sorts, some 54% of people looking for a product now begin their search directly on Amazon, a jump from 46% in 2015, according to Jumpshot, a research firm that collects data from 100 million devices.

“Consumers are no longer double hopping between Google and Amazon, they just go straight to Amazon,” said Scott Hagedorn, chief executive officer of Omnicom Media Group North America, the ad-buying division of Omnicom. The search-ad dollars shifting to Amazon are from companies that sell products on its platform, such as consumer packaged goods manufacturers and retailers, Mr. Hagedorn said.

Todd “Bubba” Horwitz