Amazon advertising has substantiated itself as a valuable component of Amazon.com Inc.’s billions of dollars in revenue. And while the consistently increasing number of advertisers on the ecommerce giant is great for Amazon’s pockets, it results in more competition for third-party sellers looking to survive on the marketplace.
Amazon’s “other” category—which mostly consists of advertising revenue, according to Amazon—was $5.40 billion in Q3 2020, a 50.5% increase year over year. Marketing agency Merkle found that Amazon ad sales grew 77% year over year in Q2 2020 and 67% in Q3. These sales were against the backdrop of early coronavirus shifts as shoppers moved online, but they were also during a time when Amazon was dealing with logistical problems concerning fulfillment.
For this year’s Prime Day, Pacvue found that average spend on Sponsored Brand ads was up 263% year over year on day one of Prime Day, and up 238% on the second day. With such strong growth for Amazon advertising, marketplace sellers must plan strategically around their marketing budgets, says Chris Bell, CEO and founder of Perch, a technology-enabled consumers products company that acquires and manages Amazon FBA (Fulfillment by Amazon) businesses.
“I think for a seller on Amazon, the complexity of the offerings increases, and it’s harder to know how and where to deploy your spend and how to manage these things,” Bell says.
Ryan Sutton, vice president of growth, Perch
Chris Bell, founder and CEO, Perch
However, he adds that despite the “very competitive ecosystem” of Amazon advertising, retailers only need to spend enough to get noticed, build a reputation and increase their rankings within the Amazon search engine. This is especially true when products or brands are launching for the first time, Bell says.
While advertising on Amazon is competitive, once retailers get the hang of it, it’s easy, says Kerry Mellin, co-founder of EazyHold, a specialty retailer selling removable silicone grips for children and adults that need fine-motor assistance.
“In the beginning, it was challenging to find the advertising niche, finding titles for our products that brought in the right people,” she says. “Changing a title [of a product] would sometimes stir things up, and we would get booted into another category, so there was kind of a steep learning curve the first year.”
Amazon offers a variety of advertising platforms and ad types for marketplace sellers, which can be accessed through Amazon’s demand-side platform (DSP). This makes Amazon advertising easier to navigate and strategize, both Bell and vice president of growth for Perch Ryan Sutton say.
Amazon’s ad types include sponsored brands, sponsored display, sponsored products, video ads and new audio ads, which are currently in beta testing. These ads can appear in a variety of locations, including banner ads across the top or on the side of the marketplace website, in search results, on product pages of competitors and on a marketplace seller’s own product or brand page.
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