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Retailers Expect Another Banner Year of Amazon Ad Growth

Consumer demand remains high on Amazon, even after the pandemic shopping surge. The reason is that shoppers have become more comfortable than ever shopping online, says Brittany Lerario, Director of Channel Solutions at Sidecar. Amazon’s fast shipping, Prime perks, and wide breadth of products make online shopping even more appealing for consumers which has spurred Amazon ad growth.

“Especially with Amazon Prime’s two-day shipping, shoppers found it really convenient to shop for everything they need online,” says Brittany. “I think online shopping, particularly on Amazon, will continue to grow this year.”

In this episode of Retail Uncharted, Brittany explores how retailers can tap into increased demand on Amazon with a strong advertising strategy. She dives into findings from the 2021 Benchmarks Report, explores Amazon ad growth, and outlines ad strategies top retailers employ to drive revenue and increase brand awareness. With Prime Day 2021 around the corner, Brittany also offers advice for retailers looking to make the most of the two-day sales event.

In this episode we ask Brittany:

  • How did the Amazon shopping surge impact retailers’ advertising strategies?
  • What factors drove ROAS fluctuation on Amazon, as reported in the 2021 Benchmarks Report?
  • How does ad performance on Amazon differ between single-brand and multi-brand retailers?
  • What advice do you have for retailers looking to improve their Amazon advertising campaigns in the year ahead?
  • How can retailers who have budget constraints find ways to excel on Amazon Advertising and convert more customers?
  • How can retailers balance the need to increase sales on Amazon with the need to build a one-on-one relationship with shoppers on their own website?
  • What ad formats is Amazon prioritizing in the future, and how can retailers adapt their strategies?

Top Sound Bites

On the factors influencing ROAS trends throughout 2020

Brittany: I think in the beginning, there was a lot of panic buying. Nobody really knew when they were going to be able to get to a store again and purchase something that they needed, especially essential household items like toilet paper, hand sanitizers, and things of that nature. Those items were out of stock in the stores and supermarkets. Everybody went online to purchase as much as they could.

We had a lot of people that probably didn’t previously do a lot of online shopping. All of a sudden they’re on Amazon because they don’t feel comfortable going to a store.

ROAS definitely dropped off a little bit, not due to traffic but inventory. There were supply chain issues and getting additional inventory was a challenge. Slowly, over the summer months, performance took a little bit of a dip because of this.

On winning Amazon Advertising strategies for single- and multi-brand retailers

Brittany: Generally, the single-brand retailer sells their own brand so they have a brand registry. That’s not to say that multi-brand retailers can’t or don’t, but it’s generally just a little harder to get that brand registry if you’re not selling your own brand. With the brand registry, we’re able to create sponsored brand and display campaigns. Those allow you to take up more real estate within Amazon and show your campaigns more often.

With multi-brand retailers, we can also differentiate the campaigns based on margin. Some of our retailers have different efficiency goals or different KPI metrics that they’re looking at per brand. We’ll work with our retailers to break the brands out within different campaigns or ad groups so that we can focus on different metrics. For multi-brand retailers, we’re able to focus on various KPI goals, instead of just one overarching goal.

A lot of times those are cost-of-sale or ROAS-based goals, depending on their margins. Some brands are newer to the Amazon space so their main goal is to drive brand awareness or traffic. They may not care as much about efficiency as driving clicks and impressions. It’s mainly awareness or efficiency that we’re focused on.

Tips for a successful Prime Day 2021:

Brittany: Make sure you have enough inventory to be able to sustain you through a two-day event. It’s a huge traffic day on Amazon across all verticals so really make sure that you have the inventory on hand or within the Amazon warehouses.

Aside from inventory, look at your margins. Do you have higher margins on certain products? If so, consider running coupons on those products. Customers searching on Amazon are going to be looking for deals during this two-day event, so if you’re able to run a coupon, even if it’s just 5% off, I would definitely suggest doing that.

Overall, be prepared for an increase in traffic and therefore spend. Prime Day is obviously coming at the end of the month in June. If you have a really strict budget that you can only spend a certain amount for the month of June, make sure to allocate an increased level of spend during the two-day event. If you need to decrease your budget during the first two or three weeks of June in order to be prepared for Prime Day on the 21st and 22nd, I would say do that. Having the budget to keep your campaigns running is the most important tactic for Prime Day.

On balancing sales growth on Amazon with developing one-on-one relationships with shoppers:
Brittany: Retailers do like that one-on-one customer relationship and brand loyalty. They want to actually get shoppers to their site and get repeat purchases on their site versus having them purchase from a third-party site like Amazon. There is a balance.

Some of our customers like to advertise certain products on Amazon. They’ll sell higher AOV products on their website. Other products that have really high margins or if there’s an excess of inventory, they’ll sell those on Amazon. Some customers have a balance between the two, not advertising their whole catalog on Amazon because they still want to have a relationship with the customer on their website.

On the other side, some of our customers are just getting up and running as a brand. They don’t have that brand loyalty. They really value selling their products on Amazon to start interacting with shoppers. It’s an easier way to get shoppers to start purchasing from you then expecting them to purchase from a website that they’ve never heard of and don’t know if they can trust. We have a lot of retailers that put significant budget towards their products on Amazon versus their site. It depends on what you’re looking for as a retailer.