Seth Godin calls Amazon search ads 'legal theft' paid for by shoppers

Seth Godin's latest blog post calls Amazon's search advertising a form of legal theft, while noting that it is not a tax in the usual sense: taxes fund public goods such as medical research and parks. The post was published on 18 August, days after his publisher began buying search ads on Amazon to promote his new book.

Nearly a billion dollars a week

By Godin's estimate, Amazon's search ads bring in close to a billion dollars in revenue every week — enough, he calculates, to give every one of the company's employees a $35,000 cash bonus and still have change left over. The essay was prompted directly by that ad spend: his own publisher started bidding on search terms to introduce readers to the new title.

Why search gets worse

Ad-driven search does not help a shopper who is unsure what to buy, the author argues. When someone searches for an air fryer, Amazon already knows which model has the best reviews, the fewest returns and the best price; the purpose of the ads is to steer the buyer to a different product. The ads make the search worse, he writes, noting that Cory Doctorow described the same mechanism three years ago and that its scale has already doubled. Because rivals bid as well, the maker of the best product has to buy ads simply to protect sales it would have won anyway, and zero-sum search ads do not grow a category — they only divide a fixed pie. One study cited in the post found that an e-commerce site running search ads sells fewer items than the same site without them.

Who picks up the bill

More than $50 billion a year goes into these ads, and the money does not come from sellers, Godin writes: it comes from customers, either as higher prices or as energy drained from the development of new products. He points to two side effects. Producers may shift to cheaper, shoddier versions of their goods in order to fund a bigger click budget. And Amazon — like Google before it — has an incentive to keep organic search results weak, so that sellers buy more advertising. Amazon built its customer-centric reputation by lowering prices and opening distribution to merchants that lacked reach, but it can no longer credibly claim that role, Godin concludes. The highest-yielding ad his publisher tested cost about a dollar per click: money paid to show shoppers an ad for the book they had already gone to buy.