Amazon is all-in on advertising.
Here’s what brands need to know.
Source: The Economist
It’s not your imagination.
Amazon.com is more densely populated with ads than ever before, peppering your path to purchase 8K TVs and 8-packs of batteries with a barrage of competing and complementary products.
What gives?
After years of playing its cards close to the vest, Amazon is showing its hand in the digital advertising market.
And it turns out they’ve had a trump card all along.
Top inventory on the Amazon Search Engine Result Page (SERP) for “8k tv”
First capture enough demand to compel brands to sell on amazon.com.
Then compel brands to advertise on Amazon so they can keep selling on Amazon.
“For every product I sold through a Sponsored Products campaign, Amazon was effectively getting paid twice – once for running the ad, and again for managing the sale of my product.”
– Thomas Smith, Debugger
In tandem with transformational effects of the pandemic, Amazon’s commitment to grow its highly profitable advertising business resulted in a 125% annual increase in ad spending by brands in 2020.
Their estimated advertising revenue is between $21.4 billion and $15.7 billion – making them the third largest online ad platform in market share behind Google and Facebook with 10.7% of the overall U.S. digital advertising market.
All told, Amazon can make a strong argument that it is the single biggest force in paid media today, since they are also the top ad buyer in the U.S., spending $6.8 billion on ads in 2020.
How they’re hitting hypersonic growth.
Source: eMarketer
Unlike Google and Facebook, Amazon doesn’t need a penny from advertisers to thrive. eCommerce sales and subscriptions on amazon.com account for almost 80% of their 2020 revenue ($368 billion) compared to less than 5% from advertising.
But we (200 million Prime Members, 300 million Monthly Active Users...) need Amazon. By extension, so do retail brands.
60% of Americans – potentially 3 in 4 – skip Google Search and start online product searches directly on Amazon.
9 in 10 people price-check Amazon prior to making any eCommerce purchase.
And in contrast to Google and other digital advertising channels, almost all searches on amazon.com indicate an intent to purchase. Pound for pound, this is why ads on Amazon are more likely to convert users than ads on Google, Facebook and other social platforms.
People don’t browse Amazon to learn or be entertained – they’re there to buy.
The proof is in the returns for brands advertising on the site.
Source: Forbes
A majority (59%) of retail brands report that Amazon provides the highest Return on Advertising Spend (ROAS) of any platform.
A different study reports that Amazon advertising has a 20% higher ROI compared to a brand’s average marketing ROI.
Earned search and shelf page visibility: RIP.
Earned (aka: organic / unpaid / natural) product listings are an endangered species on competitive product category pages and search result pages.
Top inventory on the Amazon Search Engine Result Page (SERP) for “8 pack 9v batteries”
Paid listings (namely sponsored product ads) now represent 40% of the first 10 products shown on most Amazon SERPs.
For highly competitive product categories where Amazon enjoys ≥80% eCommerce market share (including electronics, batteries, home improvement, food, sports, household essentials, and health/medicines, etc.), we’ve found that earned listings are virtually never found above-the-fold when browsing on mobile or desktop devices.
If this sounds familiar, it’s because Amazon is following the Google SERP Design playbook with panache. The latter might even blush if Amazon wasn’t a clear and present danger to their Ads business.
But Amazon isn’t just cutting into Google’s dominance of the Search Ads market.
They’re outperforming Google with more visual and compelling ad formats – incorporating eye-catching video, imagery, and sponsored “expert” content and UGC (see below for a few examples in the TV category).
Paid placements on Amazon are getting bigger, bolder, and more dynamic to match the video-first internet.
Amazon Ads are here to take over.
Amazon is part and parcel of everyday life. Their market cap ($1.75 trillion) exceeds the GDP of 92% of countries. But they’re just getting started in the ad selling / DSP business.
In 2016, their ad revenue comprised less than 1% of the overall U.S. digital advertising market. By 2026, we think they will own at least 15%.
Even 15% seems modest considering the diversification of advertising opportunities on amazon.com, advertising growth on Twitch, their foray into Connected TV and numerous other investments in media.
The good news?
Brands are catching on.
78% of retail brands now sell their products on Amazon compared to 55% last year. And 88% of these brands advertise on the platform, with 59% spending greater than $60,000 monthly compared to 38% the previous year.
The bad news?
Source: New York Times
The arm’s race for ad space is going to get very costly, very quickly as retailers ramp up their investment in ads to defend their sales on Amazon and conquer new territory (including with conquesting ads on competitor product pages).
Brands used to be able to easily reach shoppers by optimizing organic product listing details and imagery to earn top rankings. No longer.
Smaller vendors are at risk of being priced out of advertising altogether – and potentially out of business as a result.
Among Fortune 1,000 brands, superior creative strategy will become paramount as Amazon unveils and prioritizes ad types beyond simple sponsored products.
Knowing what other brands are doing is half the battle. Here’s how we help:
These are just a handful of the top questions every brand and creative agency wants answers to before sinking millions into new campaigns:
What are our competitors up to? Which types of ads should we create? Which pages/keywords should we advertise on? Which products should we promote? What imagery should we use? How often should we serve ads? How can we stand out?
Neither Amazon nor third-party analytics platforms answer these questions. Fortunately, analyzing in-the-wild advertising on Amazon is squarely in our Owned and Paid Media wheelhouse.
Here’s how we help:
We extract data from Amazon.
We can mine and capture any (public and ungated) shelf, search, and product pages on Amazon.We parse Amazon.
We identify sponsored content, paid media placements, and marketing imagery within Amazon SERPs and other pages.We recognize and label embedded creatives.
Using 30+ neural networks, we detect product and ad intelligence within sponsored content / product imagery and video.
We extract Brands (Logos & Names), Products, Model Numbers, Offer Terms, Pricing, and a host of other attributes from within paid placements on Amazon. We also identify if an asset is organic or sponsored and where it appears on the page.
Want to learn more? Send us a note to request more information about our Amazon scraping and ad intelligence offering.