Say you're in the market for a new pair of headphones or a new guitar tuner. Where would you start your search? Google, right?
Not so fast. According to a 2016 survey of 2,000 consumers, 55% of people actually skip Google altogether and start their online shopping searches directly on Amazon. Google still remains the top search tool for B2B purchases and services, but Amazon is steadily overtaking them in the B2C market.
When you’re thinking about your online advertising strategy, you want to meet your consumers where they are. And if you're a B2C company, that place is -- more likely than not -- Amazon.
Google and Facebook still command the biggest slice of the pie in the online ad market, generating respective revenues of $80 billion and $27 billion in 2016. But the two tech giants only control around 20% of the market, leaving plenty of room for a new player (say, Amazon) to emerge.
Experts estimated that Amazon earned around $1 billion from ads in 2016, but some say that number will surpass $2.5 billion in 2017. They're on the fast track for exponential growth in the coming years, but since they're still not officially a major player in the online ad business, there's an incredible opportunity for advertisers to get in early and score better ad positions at a lower cost than more established properties like Google AdWords.
Who can benefit the most?
If you are an e-commerce company, advertising on Amazon is something you should definitely explore. B2B companies, consulting firms, lawyers, others will still see better ad returns on more established properties like Google, LinkedIn, and Facebook at the moment.
Getting Started With Amazon Ads
Amazon has several advertising programs to chose from, but the best one to get started with is Amazon Sponsored Products. The Sponsored Product ads are really just image ads -- similar to display ads in Google Adwords -- but the cool thing is that they appear in search results on Amazon right next to the searched products. So when I do a search for “acoustic guitars” in Amazon I get this:
The only visible difference between the sponsored and the non-sponsored results is the gray “Sponsored” tag that appears above the product title. You'll also see sponsored products can appear above the rest of the results.
The same search in Google yields this:
The process for Amazon Sponsored Products is very similar to advertising on Google AdWords: you select keywords, and your ad will show up when someone searches for them. Like AdWords, you pay only for the clicks you receive on your ad.
And when someone clicks on your Sponsored Product Ad, they're sent to your landing page, which would typically be your Amazon product detail page.
You Might See Better Results on Amazon vs. Google AdWords
A major difference between Google AdWords and Amazon ads is where people current sit in the purchasing process when they search on each platform.
People searching on Google are more likely to be at the beginning of the buyer's journey, i.e., they just began their search and or are currently just browsing for solutions/products. But when someone begins their search on Amazon, that person is usually more prepared to make a purchasing descision.
Building Your Amazon Ad
Amazon provides a complete introduction to getting started you can see that here.
But just to highlight the process:
You will need to have an active seller account on Amazon.
You need to have active product listings in at least one of Amazon’s product categories.
You need to have Buy Box.
The Buy Box is the box on a Amazon product detail page where customers can begin the purchasing process by adding items to their shopping carts.
Some Nuts and Bolts: Keywords, Ad groups, and Bidding
Just like Google AdWords, Amazon sponsored products uses keywords to trigger your ads. You can choose automatic targeting -- letting Amazon choose your keywords for you (this is the right choice for new advertisers), or you can choose manual targeting -- where you choose your own keywords (a good choice after you have accumulated some data from a running campaign).
There are three types of keyword matching: broad, phrase, exact.
Ad groups are used to group SKUs together for automatic or manual targeting.
Reporting in Amazon Ads
Amazon will also provide advertisers with data about searches for particular keywords. Similar to Google AdWords, you have to be an advertiser to get access to this informative data. The data includes which search terms are working and performing the best, enabling you to add new keywords and refine the performance of your campaigns.
For each keyword, the search terms report will include data on:
Click thru rate
Cost per click
Conversions/number of orders placed
SKU for the sale
The Dollars Make Sense
While Google and Facebook (and even LinkedIn) dominate the marketplace in online advertising, that dominance comes with a corresponding higher cost-per-click. According to content26.com, “the average CPCs on Amazon Marketing Services was about 38% lower than Google Adwords”.
Why is this? Google AdWords has been around for over 15 years, and originally cost-per-click was not very high. But with increased visibility and popularity of the platform, CPC rates have continued to rise along with the number of advertisers. This means more and more advertisers are competing for the same amount of space.
Amazon is just getting into the game, having only been around advertising-wise for about five years. The number of advertisers seeking space on the platform is much lower than Google, which means less competition. In addition, the advertising on Amazon is only focused on products, which means less competition from related services like you see regularly on Google AdWords.
All of this implies a lower cost-per-click for advertisers of products on Amazon.
Plus, while Amazon uses past performance and sales on Amazon to determine positioning, sponsored content on Amazon can turbocharge newer and smaller companies and get them more consumer attention. You can use sponsored content to help push your listing to the top of the search results.
Get In Early
If you have a product to sell, now is the time to consider using Amazon sponsored products ads. You can get in relatively early, at a lower cost-per-click, and have a chance to promote new products at the top of an Amazon search. It’s still very early days for Amazon advertising -- this creates a big opportunity.
For more information about inbound advertising on Amazon or any of the other platforms - AdWords, LinkedIn, or Facebook you can arrange a meeting with me here -- there is no charge for these meetings.
Originally published Oct 20, 2017 8:00:00 AM, updated July 25 2019