Increased Amazon Ad Spend Brings Results

May 10, 2019

This article is included in these additional categories:

Advertising Trends | Digital | Display & Rich Media | Industries | Paid Search | Retail & E-Commerce | Spending & Spenders

Advertisers are reaping the benefits of their increased investments in Amazon Sponsored Brands and Products, per new research [download page] gathered from Merkle clients. While spend on Amazon Sponsored Brands has increased a full 77% year-over-year (YOY) in Q1 2019, sales grew by more than 200% YOY.

Accounting for the majority (85%) of Amazon ad spend, Sponsored Product spend for Merkle clients increased by 19% YOY in the first quarter of 2019. This has led to a 55% increase in clicks on Sponsored Products ads and 101% increase YOY in sales.

Sponsored Brand ads, which only account for 13% of Amazon ad spend, even after the significant investment, experienced even more impressive results in Q1. Brands saw a 120% YOY increase in ad clicks and an increase of 202% in sales.

It’s not only Merkle clients that are seeing the benefits of putting more of their ad spend towards Amazon. Separate research found that 4 in 10 retailers believe that Amazon ads have better ROI than competitors Google and Facebook.

Merkle also found that Amazon Sponsored Products and Brands both have much higher conversion rates than Google Shopping. However, Google Shopping did surpass Amazon when it came to CTR in Q1.

Other research may be able to spread some light on why Amazon has had success when it comes to ads. Amazon accounts for almost half (47%) of all e-commerce sales in the US, with its closest competitor, eBay, only having 6.1% share of US e-commerce sales.

Back in September 2018, Jumpshot reported that Amazon search has surpassed Google search when it comes to product searches, with Amazon receiving more than half (54%) of product searches compared to Google’s 46%.

Added to all this is the fact that, despite its distractors, Amazon is where shoppers tend to go when they shop online. Recently, Episerver showed that while Google was still the first place shoppers went when they needed inspiration or when they knew what product they wanted to purchase, Amazon followed very close behind – particularly as the first place shoppers go when they know what they intend to purchase.

While the outlook for Amazon looks promising, it has faltered in a couple of important areas. The American Customer Satisfaction Index reported that Amazon is no longer the top retailer in customer experience. Perhaps even more concerning is that Amazon’s reputation has taken a hit and has fallen out of the Reputation Institute’s top 50 most reputable companies in the US.

To read more, download the Merkle report here.

About the Data: Figures are derived from samples of Merkle clients who have worked with Merkle for each marketing channel. Where applicable, these samples are restricted to those clients who 1) have maintained active programs with Merkle for at least 19 months, 2) have not significantly changed their strategic objectives or product offerings, and 3) meet a minimum ad-spend threshold.

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