Amid the COVID-19 outbreak, Amazon (NASDAQ:AMZN) has been scaling back the number of advertisements it runs on Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, which could be a huge blow for the Internet search giant.
Tinuiti, a marketing agency that is in control of roughly $1.5 billion in annual spending for several advertisers told Bloomberg that Amazon's Google ad spend has been cut back dramatically since March 11. Tinuiti's director of research Andy Taylor said Amazon has "significantly" reduced its Google Shopping and text advertisements.
Amazon may not need the increased business given its already dealing with a huge surge in demand as people seek everyday items that have disappeared off store shelves amid panic stockpiling. In response, Amazon is prioritizing orders for household items and medical supplies. The eCommerce giant is also hiring 100,000 additional employees to meet the demand.
For Google, losing some of Amazon's advertising dollars is bad news, given that part of its business has been witnessing slower growth. The pandemic could hurt it even more than just a reduction by Amazon. Travel websites are big advertisers on Google and with that coming to a halt amid COVID-19, the industry could slash their budgets as well.
eMarketer predicts advertising spending growth will be 7% in 2020 down from 7.4% because of COVID-19. The market research firm said the total spending on ads will be $691.7 billion, lower than the previous forecast of $712 billion. The research firm noted the estimate was made on March 6, before the 30-day ban on travel was announced by President Trump. A Google spokesperson wouldn't comment on specific advertisers but told Bloomberg it's not unusual for advertisers to adjust their campaigns.