We’re Still in the Early Innings of Advertising on Amazon

By Jeff Bander, EyeSquare 

For years, digital advertising has been dominated by two behemoths: Google and Facebook. The tech giants were able to grab hold of the marketplace not only based on the sheer scope of their audiences but also on the sophisticated measurement and analytics tools they were able to offer their customers.  Recently, the tides of the Google and Facebook duopoly are shifting as eMarketer marked a drop in Google’s ad revenues for the first time

While Google and Facebook’s dominance has long seemed insurmountable, the past two years have seen the rise of a third major online advertising player. Long established as the only game in town in e-commerce, Amazon has become a major digital advertising destination in its own right, as the dominant duo evolves to the Big Three. Furthermore, the massive societal changes brought on by COVID-19 have only accelerated this trend: as more and more consumers around the world have turned to online shopping for their daily needs, Amazon has reaped the rewards of increased traffic and trading volume–making the advertising play even more enticing.

It’s only logical that advertising dollars will always follow consumer behavior; as people spend more time browsing on Amazon, marketers are already taking note. Strong brand-to-customer relationships on the platform have helped drive 88 percent of brands to adopt the Amazon advertising platform as part of their mix. But, as the retail media marketplace ecosystem heats up, advertisers are still learning the benchmarks and best practices to plan, target, optimize, and measure these campaigns. Not only are marketers comparatively unfamiliar with Amazon, but they are also missing the tools that made it so easy to quantify the impact of ads on Facebook and Google in the first place.

Marketers who are sitting back to see how this new advertising playground unfolds won’t be able to ignore the $1.5 trillion elephants in the room for much longer. Thankfully, they are already coming to understand what performance data is available regarding their advertisements on Amazon. With advertisers able to better understand how their ads perform in real-time on the Amazon platform, they can also start to ask and answer some key questions, just like they do on the other two goliaths.

Studying consumer behavior and conversion

At the most basic level, marketers are interested in knowing what messages and experiences are prompting a response in consumers. Attention is the oxygen that drives campaigns, while the worst possible result for an advertisement is for it to be ignored. Advertisers can test in real-time and in a natural environment on Amazon and answer the all-important question: Which ads trigger shoppers to interact? Using simple A/B testing, marketers can quickly evaluate which of their spots are most effective in driving engagement. What’s more, they can also determine What impact do ads have on conversion? This metric allows marketers to look beyond a simple response and quantify whether their advertisement is prompting consumers to put products in their shopping cart. They can now see clearly which ads consumers spend more time on, how much time they spend on the product detail page (PDP) and measure attention and conversion.

Assessing brand impact too 

Even when advertising on the biggest marketplace in world history, not every touchpoint is designed to drive customers to purchase however. For many marketers, like on other platforms. a significant aspect of campaigns is to build brand awareness and shape customer perceptions. Amazon testing is now able to deliver a quantitative answer to the question, What is the effect of my brand advertisement? By enabling marketers to test, quantify and compare the impact of multiple advertisements, Amazon allows them to develop campaigns that provide maximum impact for brand awareness and reputation and design a more full-funnel experience too.

Quantifying the return on investment

Above all, brands and marketers will always be most interested in the dollars-and-cents impact of their advertisements. Amazon testing can answer two key questions that help advertisers to determine the value of their spending: Which ad delivers the best ROI? and Is it worth investing more in premium paid ads/content? These questions help marketers to compare not only the basic effectiveness of the advertisements themselves but also the performance of different placements on the page. Is it worth more to place a banner ad in a high-traffic category, or will a specific brand derive just as much value from an ad placed “below the fold”? And, will investing more, in premium ads or custom content, drive better returns or just cost more?

With Amazon’s increasing importance as a digital advertising destination, advertisers will be well served to familiarize themselves with Amazon as an advertising platform and to learn more about the tools that are available today to help them to make the most of their spending. Amazon is no longer the wild west. It may be intimidating but it can also be managed just like the other two, with a little discipline and resourcefulness. Early adopters will benefit from first-mover advantage, learning from the best practices that are available now and be better positioned to evolve with the bleeding edge of the e-commerce–and advertising–ecosystem.

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