When it comes to Amazon.com Inc.’s Prime Day, the retail giant doesn’t have to spend much to drive massive growth in traffic and sales, according to new data. In fact, the massive flood of traffic actually bolstered Amazon’s rapidly growing advertising business.
Amazon was relatively modest in its advertising spending to promote the mid-July retail holiday. In the two weeks that followed Amazon’s July 2 announcement that Prime Day would kick off mid-afternoon on July 16 and run for 36 hours into July 17, the retailer spent roughly $50,000 on U.S. Google desktop text ads based on Prime Day-related keywords such as “Amazon Prime Day” and “Prime Day,” according to Kantar Media. That daily average spending in the lead up to the sales event is roughly in line with its spending last year when it spent $24,000 on U.S. Google desktop text ads based on those same keywords in the week before the event.
The cost per click for its Prime Day text ads was 19 cents. Those results suggest that relatively fewer consumers were searching and clicking on those ads, says Jim Leichenko, director of marketing at Kantar Media.
During roughly the same time period, July 2-16, Amazon spent an estimated $5.3 million on national TV ads promoting Prime Day, according to Kantar Media data. That’s a 12.8% increase from $4.7 million a year ago.
For perspective, Amazon spent $171 million on TV ads in the first six months of the year, a 41.3% jump from $121 million a year earlier. While increased Super Bowl TV ad spending accounted for some of that growth, the retailer has been increasing its overall TV ad spending this year.
Between July 2 and July 16, Prime Day ads accounted for 54% of the retailer’s TV ad spending, down five percentage points from 59% a year earlier.
Amazon’s relatively modest Prime Day specific advertising stems in part from the fact that Amazon’s massive scale and customer base enabled it to use its own resources to promote the event, according to an InfoScout survey of more than 1,000 consumers who made a purchase within the first 25 hours of Prime Day. For example, 51% of consumers heard about the sale from Amazon’s website, 43% heard about it from an Amazon email and 40% learned about it from Amazon’s mobile app (respondents could select more than one response).
Amazon’s marketing efforts appeared to effectively spread the word about the event. 89% of Prime Day shoppers were aware it was Prime Day before they visited Amazon’s site or app. And 54% said Prime Day was the primary reason they were shopping on Amazon on that day. Moreover, 84% of those shoppers planned to shop on Prime Day, up from 78% in the same survey a year earlier.
Consumers’ expectations were clear by looking at search data. On the day Amazon announced the date of Prime Day, searches for “Prime Day” rose 332%, according to Hitwise, which is owned by digital marketing firm Connexity Inc. And the volume of “Prime Day” searches rose 145% compared to last year from June 10 to July 10 compared with the corresponding period a year earlier.
And despite glitches on Amazon on Monday, the majority of consumers’ posts relating to Prime Day were positive; positive sentiment via social buzz was high (80%), but down about five percentage points from last year’s Prime Day, according to Adobe Digital Insights, which examined Amazon-related social mentions. Moreover, the overall volume of Prime Day discussion rose about 6% compared with last year with a significant amount of social buzz focused on Amazon employees’ dogs shown on the Amazon Prime Day error pages. In fact, #DogsofAmazon trended on Twitter.
Amazon’s ad business
The surge of traffic to Amazon’s site and app was good news for Amazon’s fast-growing advertising business, a profitable revenue source that supplements its low-margin e-commerce business strapped with high shipping costs. Brands and merchants buy advertising to gain prominence on the site, helping Amazon make more money on the popular platform. Amazon is the fourth-most popular site in the U.S. in terms of web visitors, behind Google, Facebook and Google’s YouTube video service.
Prices for keyword search ads are auctioned based on supply and demand, with the costs spiking on Prime Day because the company’s Prime members are big online spenders, said Jeremy Hull, vice president at iProspect, a digital marketing firm.
“Most brands increase ad spending on Prime Day,” Hull said, adding that they saw as much as a 30% lift in search volume and brand engagement on Google and Facebook that day as shoppers browse before making an online purchase.
Amazon is No. 1 in the Internet Retailer 2018 Top 500.
Bloomberg contributed to this report.