Dive Brief:

• Some marketers are shifting up to 50% or 60% of the search budgets they usually allocate to Google toward Amazon, CNBC reported, citing two unnamed media agencies. CNBC spoke to multiple agency executives, who largely requested anonymity due to the sensitivity of discussing their clients' business, and found that hundreds of millions of advertising dollars are moving away from Alphabet's search product to Amazon.
• Chris Apostle, EVP and head of performance for North America at Havas Media, told CNBC that 20% to 30% of the agency's clients are moving 50% to 70% of their total search advertising budgets to Amazon. Havas clients have upped their Amazon budgets 300% since 2017, according to Apostle, and plan to further hike them 200% to 300% next year.
• The overall migration to Amazon appears to mostly be occurring in consumer packaged goods (CPG), according to CNBC, and less so in other categories like automotive and travel. An executive suggested to CNBC that more brands are viewing Google search ads as "quaint," since Amazon can more closely link to a sale. A different executive said advertising on Amazon provides a more seamless shopping experience because it doesn't demand users do things like sign up or input their credit card information.  

Dive Insight:

Amazon has been the likely third party to take on Google and Facebook for dominance in digital advertising for awhile now, but CNBC's report underpins how the Seattle-based tech giant is potentially starting to hit Google harder where it hurts. Being able to win over the favor and search advertising budgets of more CPG brands is perhaps expected, since packaged goods make up the often lower-priced, repeat buys Amazon specializes in. Google has tried to become more competitive in this space through comparatively new ad offerings like Shopping Actions, but does not have the sturdy e-commerce foothold Amazon does.

Neither Google nor Amazon provided comment to CNBC, though the publication spoke to a Google ad sales person anonymously who said he isn't seeing a significant shift in client's business toward Amazon. Instead, the ad sales person said that more marketers are coming up with new, separate brands to sell exclusively on the e-commerce site. The ad sales person said Google is "definitely concerned" about the trend, but doesn't yet view it as "a huge threat." 

Google growing more worried about established brands launching Amazon-tailored products feels significant given recent developments. Procter & Gamble's Old Spice label at the beginning of the month launched its first-ever beard care line as an Amazon exclusive. CPGs like P&G, which is the largest company by media spend in the world, are only pushing further into e-commerce as physical retail continues to experience struggles and the competitive threats of direct-to-consumer startups grow.

Other recent industry reports have shown how Amazon has tried to win more advertising dollars. Recode last month conducted what it called an "unscientific test" that showed the site was becoming saturated with search and product ads, with more brands buying into these formats. A few weeks earlier, Digiday reported on a new Amazon attribution tool that lets advertisers compare how effective ads on its sites are versus those on other sites, similar to a service Google currently offers.

These types of moves have, collectively, paid off for Amazon, as ad sales are the company's fastest-growing category, jumping 129% year-over-year in Q2 results posted in July. The acceleration of Amazon's advertising business has continued to outpace analyst expectations. The researcher eMarketer recently revised its forecasts on Amazon, projecting the company will generate $4.61 billion in U.S. ad revenue this year, leaping over its previous $2.89 billion estimate from March and making Amazon the third-largest digital advertising player, ahead of other companies like Microsoft and Verizon's Oath.

Those figures are still comparatively small against Google, which eMarketer said will command 37.1% of the total digital advertising market in 2018. However, the CNBC report noted that while Google still makes for the largest digital ad platform, spending on its search engine might be starting to stagnate, and ad dollars in many cases are being spread around to other platforms it owns, such as YouTube. Research has suggested that consumers, too, are more frequently starting their searches on Amazon over Google. The firm Jumpshot last month published a study that found that Amazon actually surpassed Google in product searches from 2015 to 2018.