E-commerce giant Amazon.com Inc. (AMZN - Analyst Report) has decided to draw the curtains on Product Ads, its pay-per-click (PPC) advertising platform and announced that it would permanently discontinue the program in October.
The Product Ads program enables businesses to drive traffic from the retailer’s platform to their own websites. It allows sellers to purchase advertising space on Amazon, even if they are not necessarily sellers on Amazon’s marketplace platform. The platform has proved to be pretty profitable for small businesses that are vending their products on their own websites outside of Amazon.
Starting Aug 11, Amazon has stopped accepting new accounts on the platform and when the lights finally go out on Oct 31, advertisers will no longer be able to post Product Ads.
Amazon did not specify any particular reason for the move but the platform was a profitable one for both retailers and Amazon. The Product Ads program allows retailers to take advantage of Amazon's popularity while still keeping full control of how their customers shop for goods and what information they share. Amazon on the other hand made about 10 cents to $2.05 for every Product Ad that was clicked upon on its website.
Amazon is exchanging the program with a new Text Ads program. The new PPC advertising solution allows running text ads on Amazon beside product searches. It is also encouraging these advertisers to use Amazon to sell their products.
The move is expected to challenge search giant Google (GOOGL - Analyst Report), which allows buyers to discover, compare and purchase products directly from retailers by clicking on Google's ads. Google targeted advertising appears on many websites including Amazon.
It seems that Amazon intends to push Google ads off the site with its new Text Ads program and cut into Google's online advertising market share.
Amazon sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the space are PetMed Express, Inc. (PETS - Analyst Report) and Groupon, Inc. (GRPN - Analyst Report), both holding a Zacks Rank #2 (Buy).
Amazon (AMZN) To Pull The Plug On Its Product Ads Program
Amazon is challenging Google by removing some Google ads from its site.
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