What’s new for Amazon advertising? Growth, growth, growth! Amazon’s advertising reach will continue to expand. In 2019, Amazon made almost $10 billion in ad revenues, which is almost 8% of the digital ad market, up more than 30% from the year before! A part of this huge growth is Amazon’s strategy of making advertising easier, more relevant and targeted, along with their release of new products and tools for Amazon advertisers.
What does Amazon’s advertising expansion mean for brands? If you want to stay competitive, regardless of your product category, an effective Amazon advertising plan needs to align with your overall sales strategy. Don’t rely on your Amazon advertising strategies of years past to help your brand grow sales in 2020. Instead, look ahead to new trends and upcoming features to grow market share and sales!
Here are the 4 biggest Amazon advertising trends to watch right now:
Trend #1: Amazon Attribution will change reporting
What is Amazon Attribution? It’s a new beta measurement solution for brand-registered sellers in the US (UK and EU to come) which provides brands that sell on Amazon sales impact analysis across search, social media, display and email media. It gives advertisers a larger, fuller picture of how their digital media channels are impacting consumer discovery, research and sales. These insights will allow Amazon advertisers the ability to quickly optimise their advertising investment and strategies to generate the best ROI.
Trend #2: Ad spend will increase
As Amazon becomes a more popular advertising platform, expect to see fiercer competition. What does this mean for brands? A higher cost-per-click (CPC). While CPC is affected by category specific competitiveness, expect to see an increase across the board. For example, in competitive product categories, like consumer electronics (i.e. wireless headphones and portable speakers), your CPC will always be much higher than in less competitive categories, like patio furniture. However, as Amazon attracts more and more brands and competition heats up, CPC will rise. We predict Amazon will attempt to compensate for the expected increase in some ways. However, brands need to be smart about their Amazon advertising strategy and investment to make your ad dollars/pounds go further. Ensure you are targeting the right keywords and negative keywords and focus on the ad format that best aligns with your overall advertising goals.
Trend #3: Video search will increase
Consumers are watching more videos that ever before, and it’s estimated that on average a consumer will spend 100 minutes every day watching online videos by 2021, a 19% increase from 2019. To compensate for this increasing trend, Amazon launched their video advertising business in 2019. We predict that we can soon expect to see a lot more from Amazon video ads in 2020. Currently, video ads are displayed below the fold for relevant keywords in search results. However, this will soon expand as Amazon is in talks with multiple publishers to sell some of their ad inventories on other streaming platforms through its demand-size platform (DSP). This would enable Amazon advertisers to reach an even broader audience, driving traffic to a product page on Amazon, their own website or another destination. Video advertising is not something that Amazon marketers can ignore!
Trend #4: Amazon Sponsored Display ads
Another new advertising solution in beta is Amazon’s Sponsored Display, giving advertisers the ability to promote their products both on and off Amazon. Sponsored Display ads are currently available for professional sellers enrolled in the Amazon Brand Registry, vendors and Amazon agencies with clients who sell products in eligible categories on Amazon. The largest impact brands will see is in potential re-targeting capabilities. If you have viewed a product on Amazon, a Sponsored Display ad will follow you as you browse websites and use apps. Brands should use Sponsored Display ads to help increase product awareness, consideration and conversions. Stay tuned, as Amazon should be releasing additional display metrics, such as detail page views, add to cart and new-to-brand metrics to help you better grow your business.
Trend #5: Amazon will siphon more ad spend from Facebook and Google
Up until recent months, Google and Facebook were dominating ad spend in the UK and US, taking up over 70% of all UK ad spend. However, for the first time, their share of the digital ad market is showing decline with platforms like Amazon increasing their market share. While Amazon’s ad sales are still just a fraction of what Facebook and Google generate, Amazon’s ad business is growing at a faster rate. Ad sales increase by 41% in the fourth quarter compared with 25% and 20% for Facebook and Google, respectively. What does this growth trend mean for brands? Amazon will continue to develop tools and products for advertisers, giving them even more incentive to invest media and advertising spend on their platform. While Facebook and Google won’t simply roll over and will continue to dominate, brands shouldn’t discount Amazon by any means!
Update your Amazon advertising strategy for 2020
While we still believe in and see the effectiveness of more traditional Amazon sponsored ads, don’t ignore the possibility of using Sponsored Display and Video Ads in your overall advertising strategy. With Amazon’s huge growth in their advertising business in 2019, expect to see more features, tools and products for Amazon advertisers to use, enticing spend away from the giants of Google and Facebook in 2020.
Does your Amazon advertising strategy need a refresh? If you have questions about how your brand can best use Amazon ads to grow awareness and conversions or would like to understand how to use your ad spend budget it the most effective way, don’t hesitate to get in touch today. We have a team of Amazon advertising experts who work with brands of all sizes to determine the best advertising strategy in-line with their overall business.