A new report from Feedvisor of more than 1,000 U.S. brands shows an increased uptake of Amazon advertising amongst the cohort: 73% of respondents now advertise on Amazon, up from 57% last year. It also confirmed why Amazon is more widely considered a challenger to the incumbent digital advertising platforms, Google and Facebook, particularly for brands selling physical products. Here are three reasons why brands are flocking to Amazon’s advertising platform.
1. Amazon drives greater ROI than Google and Facebook
A majority of brands selling on Amazon (59%) said that the platform generates their highest return on media spend, followed by Google (22%) and paid social (17%).
As a result, brands are spending more on Amazon advertising. The report found a 33% increase in the number of brands spending at least $40,000 per month on the platform.
The respondents to this survey were leaders from U.S. retail brands with at least 10 employees (55% had over 500 employees) and more than $10 million in annual revenue. Roughly half of respondents represented brands with over $500 million in annual revenue, making this a sample indicative of mid- to large sized brands who are generally actively advertising across many channels.
2. Amazon drives at least a 7X return for most brands
Nearly half (47%) of brands see at least a 7x return on their Amazon advertising spend (ROAS). Since Amazon’s overall advertising platform is comprised of several different solutions—from self-serve pay-per-click ads to sophisticated media buys—its important to also recognize that this is likely a blended estimate for most respondents who are using several ad types.
Brands reported the best ROAS from sponsored product ads, followed by sponsored brands, sponsored display, and Amazon DSP.
3. Advertising now available at all stages of the customer journey
Amazon’s advertising platform is becoming more sophisticated, allowing brands to target shoppers at all stages of their journey, from awareness to consideration to purchase and re-purchase.
New advertising features that have been launched just in the last 6 months include:
- Sponsored display added as a self-serve advertising campaign type (September 2019)
- Sponsored brand video (beta launch in November 2019)
- Ability to schedule key reports (January 2020)
Feedvisor says that similar to the way consumers use Amazon for every step of their purchase journey, brands utilize the platform to fulfill their cross-funnel business goals: 62% use Amazon to drive sales, 60% to acquire new customers, and 58% to build brand awareness.
“Amazon has significant influence over the modern e-commerce experience — our previous analysis reveals that Amazon is where two-thirds of shoppers start their product search and where three-quarters go when they are ready to make a purchase,” said Dani Nadel, president and COO of Feedvisor. “As Amazon continues investing in its advertising solutions, brands should seize the opportunity to reach the company’s highly engaged, loyal consumer audience at every stage in their shopping journey.”
A performance gap between vendors and sellers
The report made some interesting conclusions around the performance of vendors (who sell on a wholesale basis to Amazon) and sellers (who sell to Amazon’s customers on a marketplace model). The report found that the sellers in its cohort might be spending more on advertising, achieving better return on ad spend, and have a better handle on their customer acquisition costs.
Unsurprisingly then, 72% of vendors in the cohort say they want to expand to Amazon’s seller marketplace. The survey’s cohort included roughly equal numbers of sellers and vendors.
Although Amazon’s advertising capabilities were a major highlight for brands in the report, many are still seeking to diversify away from Amazon. The percentage of brands selling and advertising on Walmart also increased year over year. So while Amazon’s significance as an advertiser is growing, many brands are keeping their options open.
This post was written by Kiri Masters https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/kirimasters/2020/02/12/amazon-advertising-drives-higher-returns-for-brands-than-facebook-or-google/amp/