As we are now well into the month of July, it has me thinking about some of the seasonal purchases we make and how new retail patterns are always emerging. A few years ago Amazon decided to spice up the summer buying doldrums and introduced what they couched as Summer Black Friday for their over 100 million Prime members. Eyeing the success of Singles Day in China, it’s now turned into a real retail day and marketers need to be prepared – but not just for the reasons you might expect. Amazon Prime Day may seem to be all about one platform, but there are larger forces at play with ads on Amazon and lessons to be learned.
Amazon’s impact reaches well beyond their website – especially when it comes to Amazon ads – and that includes Prime Day. Our recent ROI Genome Intelligence Report offers valuable guidance for how to deal with this impact: measure holistically and go for the long game. All media has multi-channel impact and even ads on Amazon drive significant impact OFF that platform.
Let’s say you want Bluetooth headphones to drown out the world when you are at the beach. Chances are you might go to Amazon to check out the models, reviews and prices. You get busy and decide to wait to see what Amazon has on offer on Prime Day. You might see digital display ads on Amazon for a brand or two and are later retargeted with a carousel ad for the same model you were looking at on Amazon. Days later your beach trip is imminent and you liked the features of one brand you were considering so decide to not wait for Prime Day and buy them in the electronics store you pass on your commute.
Recognize this situation? There are two factors at play. One is that all media has omnichannel impact and response occurs over time. The other is that Amazon is used by many consumers as a comparison shopping engine. Since Amazon is its own (albeit theoretical and flawed) attribution ecosystem, if you buy their ads, you might think you know how many units are sold. But is that the right approach? Clients who are weighing the costs of advertising on Amazon alongside other alternatives need to develop careful strategies and measure holistically to capture the full value and interactive, synergistic impacts of those ads (in addition to the full range of activities and drivers).
Amazon has become a very successful media selling company. eMarketer cited them as the 3rd largest digital media selling company in the US at the end of 2018. With brands spending more dollars on Amazon advertising, we at Analytic Partners wanted to share some of our industry research on how Amazon platform ads impact ROI on and off the platform.
This research revealed that advertising on Amazon drives significant sales across other retail channels – in other words, advertising on Amazon helps drive brick & mortar sales. In fact, up to 70-90% of the impact of Amazon Display Ads is onto non-Amazon sales channels. We should note that this is not unique to Amazon, display ads on other websites certainly have omnichannel impacts as well.
Our results consistently show that advertising’s impact goes well beyond the immediate time, place, and channel. What this means is that advertising has a lasting effect and affects sales outside of that platform. Naturally, the largest impact tends to be on the initial platform, but the impact onto other retail channels – online and offline – is significant as shown below.
Amazon Display Marketing Impact
Amazon Search Marketing Impact
How can you tell how much off-Amazon impact display ads will have? The proportion of impact is heavily related to what percentage of a brand’s sales are on Amazon. Thus, for categories like CPG and large appliances, which have lower on platform sales, the majority of the impact will be on your other core retailers. This reinforces that marketing’s impact is often delayed and the importance of comprehensive marketing measurement.
As we approach Prime Day and look forward to all of those additional in-market shoppers, there is no silver bullet for how to allocate Amazon ad spend, as levels are very dependent on business priorities, competitive actions and what type of product is being offered.
We recommend a test and learn approach for our clients. Amazon and other digital marketing opportunities are always changing, costs are constantly in flux, and what works today may not be the same tomorrow. The key is to understand not only what works, but how well it works – and why – to make informed decisions for future success.