After years of being absent from the market for Google Product Listing Ads (PLAs), it appears that online retail’s 800-pound gorilla is finally getting into the game.

This could have a big impact on other retailers using PLAs to market their wares to consumers.

In the last two weeks of 2016, performance marketing agency Merkle noticed that PLAs for Amazon began appearing and seemed to focus on the home goods category, where it ramped up quickly:

Where Amazon does show, its impression share for PLAs generally started in the mid-teens and remained there through December 23rd. Amazon’s share then jumped over Christmas Eve and Christmas Day (the most recent day that is populated in the Auction Insights report) and is now already high enough to make Amazon a top five competitor for some programs.

While Amazon’s intentions are not clear – it could simply be running a test – Amazon’s use of PLAs seems to have grown in January. According to Internet Retailer, Merkle “found that Amazon only appeared in four of the reports in late December, but by mid-January, Amazon appeared in more than 20 reports,” suggesting that if this is a test, Amazon is expanding it.

An increasingly important part of Google’s business, and perhaps Amazon’s too

Google PLAs were launched in 2012, but while Amazon has continued to buy AdWords ads, it has not been a buyer of PLAs.

According to Merkle’s senior director of research, Mark Ballard, “The conventional wisdom around why Amazon had refused to participate in Google Shopping has been that doing so would strengthen Google’s position in the battle to be consumers’ first destination for product searches by making Google’s results more complete.

“That and Amazon would have to cut a (bigger) check to Google every month for traffic that Amazon may have eventually captured anyway.”

Amazon’s refusal to buy PLAs hasn’t hurt Google. PLA spending rose 30% in Q4 2016, and clicks grew by 43%. For retailers, PLA clicks now account for almost half of their total Google ad clicks.

Interestingly, Amazon’s absence from the market might have been a good thing for retailers. After all, PLAs give them the ability to target and sell directly to consumers and not having to compete with Amazon and its big dollars has probably made the market less costly than it would had Amazon been bidding up PLAs.

But Ballard hypothesizes that Amazon no longer has the luxury of sitting on the sidelines…

As more and more searches shift to mobile though, [Amazon’s] stance may be less tenable and profitable for Amazon, as Google’s status as the default search provider on the two major mobile platforms has meant that Google’s already commanding lead in the search business has only grown in recent years. With less competing real estate on phone results, PLAs also generate a higher share of ad clicks on mobile than desktop.

Supporting this hypothesis is the fact that Amazon appears to be more aggressively bidding for PLAs on mobile devices. As Internet Retailer notes, “its impression share of phone PLAs is about twice as high as it is for desktop PLAs.”

Bad news for retailers?

If Amazon commits to buying PLAs and scales up its efforts significantly, it could be unwelcome news for retailers not named Amazon.

A greater Amazon presence in the market would almost certainly make it more difficult for retailers to maintain their current share of impressions, and depending on how aggressive Amazon gets, it’s possible that some retailers would have to spend more just to maintain their current level, or even a lower level, of impressions.

Needless to say, retailers advertising through Google Shopping will want to closely watch Amazon’s efforts.

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