Digital Marketers Forecast Increased Spend on Amazon Ads, But Challenges Remain

November 12, 2018

Amazon is poised to become the third-largest advertising platform in the US this year, and new survey results [download page] from Third Door Media indicate that marketers have plans to dedicate more of their budgets to it in the coming year. Of the 681 digital marketers and advertisers surveyed for the report, about half (49%) are already advertising on Amazon and 80% of those plan to increase their spending next year. That includes almost half (46%) who foresee their budgets for Amazon growing by at least 25%.

For context, a separate survey released in Q4 of last year found close to one-third (31%) of B2C marketers investing in Amazon ads, with 63% planning to increase their spend this year.

That survey also revealed that for the largest share of respondents, Amazon’s ad budget had been created specifically for the platform. This latest research from Third DoorMedia comes to a similar conclusion: 55% said that their additional budgets for increased spending on Amazon would be incremental.

Amazon advertising budgets will come in some part from other channels too, however. Three in 10 said they’d shift dollars from search spend, and close to one-quarter said they’d shift budgets from display or other budget lines. About one-fifth said their additional Amazon spend would come from paid social.

That tallies with a recent forecast from eMarketer, in which Amazon’s growing presence in the advertising market was expected to come more at the expense of Google (paid search) than Facebook (paid social).

Amazon Marketing Services Most Popular

Amazon advertising is currently being used mostly for search, per the report. Among those advertising on the platform, 86% use Amazon Marketing Services (AMS), compared to 58% using Amazon Marketing Group (AMG) and 30% using Amazon Advertising Platform (AMP).

In terms of Amazon’s advertising products, Sponsored Products (79.8%) appear to be the most widely used, followed by Headline Search Ads (72.5%), Product Display Ads (66.8%) and Amazon Display Ads (55.4%).

Sponsored Products continue to hog the most spend overall by a large margin, though, according to Merkle’s latest quarterly review [download page] of client activity on the platform. Sponsored Products also have a normalized sales per click twice as high as Product Display Ads, per the report.

Inadequate Reporting Is A Key Challenge

Advertisers are measuring the effectiveness of their most-used Amazon products, but don’t seem to have extended those efforts to lesser-used products, at least for now.

Advertising Cost of Sales (ACoS) is the most commonly used metric for Sponsored Products, Headline Search Ads and Product Display Ads, followed by Sales and Orders.

However many don’t know how they measure the effectiveness of other programs, including Amazon Advertising Platform.

Inadequate reporting doesn’t help. Close to half (46%) of the digital marketers and advertisers surveyed said that inadequate reporting is among their biggest challenges when advertising on Amazon. This has been a common complaint with so-called walled gardens: a recent survey found, for example, that 2 in 3 advertisers (68%) feel walled gardens do not provide enough data to effectively analyze and measure campaigns, with a similar proportion agreeing that walled gardens do not provide enough insight to make comparisons with other channels or partners.

Beyond inadequate reporting, respondents to the Third Door Media survey also said that optimization tactics (43%) are a key obstacle. Fewer identified other challenges such as getting support from Amazon client services (34%), navigating advertising options (31%), and proving that it works (31%).

Other Survey Findings:

  • Close to one-quarter (22.5%) of respondents are using tools to automate their Amazon advertising, and another 44% plan to within the next year.
  • Among respondents not selling or advertising with Amazon, the largest reason given by far is it not being appropriate for their business.
  • Amazon advertisers are also investing in other marketplaces: two-thirds (68%) sell on other marketplaces, most commonly on eBay and Shopify sites. When combined, though, Walmart and Jet are the top competitor, as half (52%) advertise on one or the other.

About the Data: The results are based on a survey fielded in August and September 2018 among 681 digital marketers and advertisers. Survey invitations were published on Third Door Media’s websites – Marketing Land, Search Engine Land and MarTech Today – as well as on related social channels. The opportunity to win an All Access pass to Third Door Media’s Search Marketing Expo – SMX East conference in New York City was offered as an incentive.

About half (52%) of respondents work at an agency or consultancy, and about half also came from companies with under $10 million in revenues.

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