It’s clear that Amazon is on a monumental roll. The company’s growth is staggering, showing a 39% year over year increase in net sales, a 12x jump in earnings per share (EPS), and over 100 million Prime subscribers globally in Q2 2018. There simply isn’t another eCommerce company with the same market presence and influence over the customer journey.
A Hub for Lower Funnel Customer Demand
The reality is that many people start their purchase journey on Amazon, and brands can’t afford to ignore Amazon’s melting pot of customer demand. The Amazon platform captures a rich store of late stage buyer intent and conversion data, offering it to advertisers with a high degree of transparency into customer buying signals.
With a haul of $2.2 billion in advertising revenue in Q2 2018, Amazon is beginning to offer stiff competition to the incumbent digital advertising giants, Facebook and Google. Although Amazon has been offering ads since 2014, real growth began in 2017 “when the eCommerce retailer built application programming interfaces (APIs) for Amazon Media Group (AMG) and Amazon Marketing Services (AMS), so that marketers could automate campaigns and reporting”.
According to Marin’s recent State of Digital Advertising 2018 report, 33% of digital advertisers see the rise of Amazon as the industry trend that will most impact their business. It’s clear that many digital advertisers now view Amazon Advertising as a growth opportunity for their business, operating much further down the funnel than Google or Facebook. Amazon also offers a huge advantage for first movers, when you consider how competitive it’s become to reach your audience on Google and Facebook.
The Amazon Advertising Ecosystem
How can advertisers capitalise on the global reach and strong buyer intent signals on Amazon’s platform? Amazon’s ad inventory is evolving rapidly—in the past, customer reviews and price were the primary means used to help customers decide what to buy. Lately, Amazon Advertising has been giving more prominent placement to sponsored product ads in search results, forcing brands to buy ads to win top billing. Users often see only subtle distinctions between “sponsored” content and organic results, which is less distracting than you might think when both targeting and relevance levers are working correctly.
Let’s take a closer look at the type of ads that you can run on Amazon Advertising:
Sponsored Brands (previously Headline Search Ads)
These are very prominent paid ad placements where advertisers can map campaigns to specific products (ASINs). Many advertisers are looking to defend their turf on Amazon, much as they do with paid search—companies will try to muscle in on your target audience by advertising competitive brands on your product pages.
Headline search ads are a good way to generate brand visibility and protect your brand from competitive conquest by filling available inventory with your brand. ASINs also provide a great opportunity for retailers to sell complementary products that drive incremental sales.
Sponsored Product Ads
This ad units look very similar to Amazon’s organic results, but they sport a subtle “sponsored” flag. Sponsored product ads are keyword targeted and trigger when someone uses the Amazon search bar. Advertisers can use different match types to get the right kind of traffic, alongside negative keywords to exclude unwanted clicks. It’s a good practice to separate out brand and non-brand terms to avoid muddying performance metrics for your sponsored ad campaigns.
Product Display Ads
These ads are similar to sponsored product ads, but offer a greater variety of ad sizes and formats to showcase your wares to Amazon users. A key point is that advertisers don’t need to be an Amazon vendor to run display ads, since these ads can link out to the advertiser’s site.
Measurement on Amazon
Some advertisers question whether Amazon Advertising offers tools that allow you to measure attribution and campaign ROI correctly. While Facebook and Google have a big lead in this area, we see Amazon moving fast to close this gap. Recently the company announced that it was introducing a pixel-based attribution solution that will track conversions across Amazon’s properties. In addition, Amazon provides advertisers with all the standard metrics on impressions, clicks, and conversions across all product SKUs.
Brands Are Already Winning with Amazon
You don’t need to look far to find examples of large brands winning on Amazon. Bryant Garvin shares an excellent example of how Purple drove growth in market share despite a tough competitive environment. How? By playing in areas where Purple’s competitors weren’t comfortable and finding “green field” advertising opportunities on Amazon.
Instead of simply doubling-down on search and chasing increasingly expensive non-brand terms, Purple’s marketing team decided to focus on video ads and experimenting with new platforms like Amazon Advertising. It’s a great example of how to gain leverage and market share by thinking differently about your customer acquisition strategy than all your competitors.