Monday Briefing: Amazon Charged You Your Own Bid

Good morning, it's James here. Happy Labor Day. I’m working today (life of a small business owner) but I hope you all are able to take some time to unwind and close out the summer. Two federal cases landed last week, both about the same narrow question: what happens between the number you bid and the price you actually pay.

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The Lead: Amazon Charged You Your Own Bid

What happened. The FTC and 22 state attorneys general sued Amazon last Monday over how it prices search ads. The complaint alleges Amazon told advertisers for years that it ran second-price auctions where the winner "would only pay 'one cent more than the next highest bidder,'" while in practice charging Sponsored Products advertisers "their own winning bid close to 80% of the time" (FTC).

The mechanism, according to the complaint, started in 2019. Amazon added an undisclosed markup it called internally a "soft reserve price." The share of Sponsored Products auctions where advertisers paid their full bid climbed from 30-40% in 2021, to 70% in 2022, to roughly 80% in 2024. One internal document quoted in the complaint describes the price advertisers pay as something that "isn't set by an actual bidder" but is instead a "proxy 2nd price that we calculate." Another acknowledges an "invented auction participant" used to raise prices. Senior executives, including the head of Amazon Ads, called it a "clever non-transparent way to charge first price" and an "incredibly effective way to drive revenue." The FTC puts the take at tens of billions of dollars.

Why CMOs should care. This is a bidding-behavior problem before it is a legal one. In a second-price auction you bid close to your true value, because the rules protect you from paying it. In a first-price auction you shade your bid down and test where the floor is. Every Amazon bid strategy built on the second-price assumption was calibrated for a game that, per the complaint, stopped being played in 2019. The complaint also alleges Amazon "carefully ramps up surcharges" ahead of Prime Day and Black Friday, which is where a lot of you concentrate budget.

The take. Amazon's defense is, "Advertisers adjust bids based on real-world performance, not descriptions of auction mechanics," as the company told Marketing Dive (Marketing Dive). Where that is true, your ACoS feedback loop already pulled bids down and absorbed most of the surcharge for you. Where it is false, you have been overpaying on purpose for seven years. So go find out which one you are. Pull your Amazon bidding logic this week and ask your team a single question - are these bids derived from a target value calculation, or from observed outcomes?

The Contrarian Take: Google Did Not Get Off Easy

The accepted wisdom this week: Google dodged the breakup, so nothing really changed. Judge Leonie Brinkema declined to make Google divest AdX, and Google's regulatory affairs VP Lee-Anne Mulholland called it exactly what you would expect, saying the company was "very pleased the Court rejected the DOJ's proposal to break apart tools that help small businesses reach new customers and grow" (TechCrunch).

Why that read is wrong. Look at what the behavioral remedies actually touch. Google must make real-time bid amounts for open web display available to rival ad servers, deprecate Unified Pricing Rules, let publishers set different price floors for individual bidders, and give up "first look" and "last look" (AdExchanger). Those are the specific mechanics that made Google's exchange win auctions it would not otherwise win. Ownership did not move. The auction rules did.

Nobody has read the reasoning yet. The memorandum opinion sits under seal for 14 days. Jay Friedman of CartographAI put the open question well, asking "What is a web publisher to do if it wants to use a different ad server but still get Google's buy-side demand?"

Put the Google ruling next to the Amazon complaint and the week has one story in it. Auction mechanics, the layer almost nobody on a marketing team can explain (“it is a black box”), became a legal question on both the buy side and the sell side inside of 48 hours. Ask your agency to walk you through how price is set in your two biggest channels. If they cannot, you can always reach out to PCG.

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Money Moves

PepsiCo moved its global media account to Publicis without running a pitch. COMvergence puts PepsiCo's 2025 global media spend at $1.7 billion, which makes this one of the year's largest account changes, and Omnicom held the business for decades (Ad Age). Publicis takes media strategy, planning, activation, data, connected identity and technology across markets, standing up what PepsiCo calls a "One PepsiCo" global operating model (Marketing Dive). Omnicom is still absorbing Interpublic, which it acquired last fall. Losing a decades-old relationship with no formal review is the clearest signal yet that integration distraction costs real revenue.

The Trade Desk cut 15% of its staff. Roughly 585 of about 3,900 roles, a month after posting its slowest revenue growth since the early Covid quarters. CEO Jeff Green framed the reorganization as a way to "move with greater agility, focus, ownership, and speed" (Adweek). The independent demand side has spent a decade selling itself as the neutral alternative to the walled gardens. Neutrality is a harder sell when the gardens got better at performance.

The Reading List

• "Why even brilliant CMOs are struggling to find their next role" (The Drum) Mark Ritson on a senior market that has gone quiet. Forrester found 49% of Fortune 500 senior marketers held the CMO title, down from 55% a year earlier. Ritson's line about the open roles is that "increasingly, they are not being filled at all."

• "Should marketers take responsibility over profit?" (Marketing Week) JP Castlin argues against the P&L ownership push, noting that revenue growth is a top priority for roughly 60% of marketers while only about 25% prioritize protecting margin. His point is that profit emerges from variables marketing does not control.

• "Creative targeting is quietly fragmenting your Meta audiences" (Search Engine Land) The most practical thing you will read this week. Meta's delivery AI now reads creative as a targeting signal, so several ads making the same pitch compete for the same segment. One messaging angle per persona.

• "Media agencies build audit tools to prevent AI agents from overcharging" (Digiday) Gartner estimates 60% of organizations using AI will hit cost overruns from a lack of usage tracking. PMG caps daily tokens per user, Dept routes model selection through a gateway. Worth reading before you approve an agentic media pilot.

• "Chipotle deploys 100 creators" (Marketing Dive) No scripts, no shot lists, 50-plus restaurants across three countries. Chief brand officer Fernando Machado, on giving up control, says "this is the first time in my career I've made a campaign without knowing exactly what the outcome would be."

One More Thing

Both of last week's cases turn on the same failure. Advertisers believed a description of how pricing worked, and nobody on the buying side had the standing or the data to check it. Amazon's own documents, as quoted in the complaint, predicted that revealing the surcharge would cause "irrevocable damage to advertiser trust." That assessment was correct, and it is why the change stayed hidden for seven years.

You cannot litigate your way to better mechanics on your own accounts. You can ask harder questions. Pick your largest channel and find out who sets the price.

See you next Monday. Go check your bids.

—James