Practicology is now Pattern

By Charlie Bevis | Senior Consultant

The Amazon Advertising platform has seen significant growth over the past few years and is forecast to continue eating into the market share of its competitors: Google, Facebook and Bing. Understanding how Amazon Advertising differs from other advertising platforms can help performance marketers within agencies and brands leverage key skills and learnings to better ‘win’ on the marketplace.

We outline some of the key similarities and differences between the Amazon Advertising platform and other digital media titans’ offerings.  

Similar at first glance

In terms of set-up, Amazon Advertising bears a striking visual similarity to Google Shopping, with each ad directing to a specific product. Similarly, ads on both platforms are displayed above the organic listings. Amazon and Google utilise keywords to target users, cost-per-click (CPC) bids and both use the same ‘match type’ variants, i.e. exact match, phrase match and broad match amongst others.

Those familiar with both platforms may also notice that ad groups are used in the back end to manage campaigns and organise your keywords and products accordingly.

However, when we look beyond these obvious similarities between the platforms, we can distinguish more clearly how Amazon Advertising differs from other advertising platforms.

Consumer-focused advertising

Consumer surveys have shown that a large majority of digital shoppers now start their product searches on Amazon. In fact, Practicology’s report on what Australian consumers really think about the marketplace showed that 55.9% of visitors used the site to check the price of products, and a further 35.1% looked for product information or reviews. 

Consumers searching on Amazon are typically lower down the purchase funnel, unlike users searching on Google or Bing. This consumer behaviour, coupled with Amazon's focus on optimising the consumer experience with its Prime proposition, has influenced the way Amazon has developed its auction algorithm, with a focus on conversions rather than clicks.

Amazon Advertising gives precedence to ads that have high conversion rates over ads that spend a lot but do not convert as often. Simply put: Amazon’s targeting is all about final conversion. Implementing a consumer-focused advertising strategy on the marketplace is essential, especially if Amazon is a major sales channel for your brand.

How Amazon Advertising differs: a more simplistic targeting and bidding approach

Another example of how Amazon Advertising differs from other advertising platform set-ups, is through its simplistic targeting and bidding approach. Where with Google and Facebook you can target keywords, audiences, affinity groups, website visitors and demographics, Amazon only allows you to target keywords, products and categories. 

Bidding on Amazon is limited to three core strategies: fixed bids, 'down only' bids, and 'up and down' bids, therefore it is imperative that campaign managers pick the strategy that aligns most closely with their campaign’s objective.

Along with this limited bidding set, comes a reduced range of measurement metrics; a challenge for performance marketers who may be used to Google and Facebook's level of insight.

The core metric referenced by Amazon sellers is ACoS (Advertising Cost of Sale) which equates to return on ad spend (ROAS) or return on investment (ROI), indicating the profitability and efficiency of your ads.

Whilst you do get visibility on impressions, clicks, click through rate (CTR) and conversion rate, these metrics are somewhat limited when compared to Google and Facebook’s platforms.

Managing your Amazon Advertising strategy

To combat this issue, Practicology’s parent company, Pattern, has developed proprietary software named Predict, which acts in a similar way to Google’s ad managing software DoubleClick, but instead is used for Amazon ads.

Predict allows our team to set bespoke strategies with a wider set of KPIs and parameters to automatically manage and optimise campaigns minute by minute. Predict also allows us to make advanced strategies, utilising additional information such as wholesale product price, organic sales performance and product category performance.

As an example, we may look at the data from Predict and decide to boost a product until it ranks organically at the top of page one, and only reactivate bidding when the product falls below the desired organic position.

We have found that many brands working with Amazon on the Vendor or '1P' model are required to commit up to 20% of sales towards marketing. Transitioning brands from a ‘1P’ model to a ‘3P’ model, combined with the use of Predict, can reduce their marketing investment requirements down to somewhere between 1.5%-5% for some brands; with no impact on their total sales. Read our take on why going 3P on Amazon could be the best solution for your brand and improve your marketplace presence here

There’s no denying that all advertising platforms have their individual pros and cons but as Amazon’s influence and reach continues to grow steadily, it is increasingly important for brands to understand how to invest their resources wisely with a thorough and data-driven strategy in order to support their sales on the marketplace.

Do you have questions about your Amazon Advertising strategy? Whether you want our support to optimise your Amazon presence, or are interested in us becoming the authorised Amazon Seller for your brand anywhere in the world, contact us today at hello@practicology.com 

 

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