The rapid ascension of Amazon’s advertising business shows just how much room there is for it to grow, with brands only starting to understand its full potential as they prepare for an even bigger 2019. What’s going to make Amazon such a great bet for digital ads? Here are the four biggest reasons why brands are moving their advertising dollars into Amazon.
What is the best strategy for competing ad fraud in your KPIs? Get as far down the funnel with your performance advertising investments as possible. Because the further down the funnel your ad investment is, the closer you are to the point of sale and thus ground truth ROI, there is simply less room for doubt between click and conversion at the bottom of the funnel. And coincidentally 70% of buying decisions are in fact made at the point of sale. As the country’s largest online retailer, Amazon does the most business directly with consumers and that information can be effectively utilized by the brands that spend ad dollars with Amazon, to target that consumer behavior in an effort to be the product those consumers buy next.
Amazon’s retail business was fueled in large part by their commitment to extract maximum value from their first-party customer data, investing heavily in innovative predictive retail merchandising, which created flywheels within their business, driving repeat purchases, and powering their explosive growth as a retail platform.
Amazon’s commitment to discoverability has only grown as the breadth of selection it offers has exploded far beyond that of an online bookstore (you all know the story by now). When consumers are trying to find out more information about a product, it’s become a defacto search tool for many U.S. consumers and its reviews are a key part of creating a comfortable environment to buy something perceptively peer-approved.
Take coffee as an example, in a recent search for “ground coffee” on Amazon I counted 37 brands represented on the first page of search now contrast that to the local Safeway where I found just 12 brands selling ground coffee. Discovery can go much further than that though. Through ads and personalized recommendations, it gets to the point for consumers. They get to skip the part where they must browse a long list of products, and instead are served up a curated collection that streamlines purchasing decisions. Combatting the phenomenon of “choice overload,” Amazon allows for genuine discovery and search, but all while using first-party purchase data and advertising to get there.
Actual Shopping Site
This is a critical distinction for Amazon, a site that was always designed to be a place to shop. Consumers entering a setting designed for making purchases expect to be advertised to. So there’s nothing at all off-putting about them seeing something encouraging buying within those walls, this shopping intent is evident in the aggregate Sponsored Products conversion data, where we rarely see advertising conversion rates below 10% and frequently reaching 20-30%!
The same can’t be said about other avenues to spend on digital advertising. If brands are going to put money toward platforms that are geared toward interactions with friends, there’s already a conflict built in – whether they click on an ad or not. They know the ad is distracting from the purpose of the site. When a consumer visits Amazon.com, they have very clear shopping intent, in other words the most common purpose for a visit to Amazon is to buy something. Placing ads there facilitates that action… for more than 50 percent of all e-commerce purchases in the U.S.
Amazon provides attributed sales, which competitive alternatives (Google, Facebook) cannot in any meaningful way. The bulk of those sites’ transactions are outside of their view, and frankly, are mostly completed on Amazon.
The clear, one-to-one relationship from specific ad to specific sale is unique compared to the duopoly, and provides a transparency that much of today’s digital advertising landscape lacks. Possessing this sort of information allows brands in-depth insights into which ads work and which don’t – making for more educated tweaks to strategy and a better read on what actually works for customers on both ends of the sales funnel.
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