2024 is the Year of the Upper Funnel: But Don't Forget the Full Funnel

2024 is the Year of the Upper Funnel: But Don't Forget the Full Funnel

Thanks for reading my first newsletter. Now, let’s get into the good stuff!

We’re clearly at an inflection point for eCommerce brands. Pure performance marketing can’t be your only focus these days. Why? Well, in short, cost per clicks (CPCs) are up across pretty much every ad placement on Amazon, be it sponsored product, sponsored brand, or sponsored display. They remain effective but require a larger investment each year.

This has been a longer-term trend that really kicked off in earnest during the pandemic, where median CPCs increased ~50% YoY from $0.78 in 2020 to $1.21 in 2021. Though today’s CPCs aren’t quite at their pandemic highs, as the marketplace continues to get more crowded, it unquestionably will be more expensive to advertise with traditional placements. Brands have to invest in other ways of driving traffic to their listings, and, increasingly, that’s via upper funnel tactics that drive off-Amazon traffic either directly to their listings or via branded search.

Meanwhile, Amazon hasn't been ignoring these developments. They’ve invested heavily in their Demand Side Platform (DSP), which allows brands to buy ad placements both on and off of the marketplace. It’s starting to pay off for the brands that have invested in building capabilities here. So, let’s dig into what Amazon has been doing and why.

How Amazon is Prioritizing Upper Funnel Marketing?

There are two major evolutions at Amazon that make upper funnel tactics increasingly attractive for brands.

The first is their investment in Amazon Marketing Cloud (AMC), which allows advertisers to easily perform analytics and build audiences using Amazon’s unparalleled 1st Party consumer data.

Importantly, AMC provides a privacy-compliant environment via its data clean rooms for brands to find cross-media insights, combining Amazon’s audience data with their own customer data across video, audio, display, and search.

This gives brands a holistic and in-depth understanding of the entire customer journey.

On the back of AMC’s insights, Amazon has ballooned into a Retail Media giant, capturing 75.2% of the US retail media market in 2023, more than 10 times the share of No. 2 Walmart Connect.

Retail Media Ad Revenues by Company
Source: Insider Intelligence

Meanwhile, Amazon’s DSP platform cannot be understated.

Just look at the many DSP placements that are available under Amazon’s umbrella.

Late last year, I was at an Amazon-hosted upper funnel Workshop, and they showed us a slide with all their logos. These logos represent an impressive array of audiences.

They're pushing original content to gain even more traction, and they’re knitting together that audience data with AMC.

Amazon's total umbrella of nearly 40 media properties
Source: Channel Key

All of this is coming at a good time:

Now, many smaller brands might be wary of jumping into advertising on Streaming TV, but Amazon has incentivized early adopters. For example, they’re subsidizing video shoots for sellers that commit $15K+ to ad buys.

As is often the case with new developments on the marketplace, brands that are early movers typically gain an advantage over late adopters. Subsidized or lower prices, less competition in general, and the ability to test and build playbooks earlier.

How Upper Funnel is a Part of Your Larger, Full Funnel Strategy

While the wariness of upper funnel tactics will cause some brands to miss the boat, some might be tempted to jump in too quickly and miss the mark themselves.

The crucial piece of the puzzle is tying your upper funnel tactics back into your larger, full funnel strategy. The top of the funnel and bottom of the funnel can’t operate independently from each other; they’re complimentary.

Here are some common mistakes:

  • Embracing upper funnel too soon while not being a leader in your niche: There’s absolutely an inflection point for when you should adopt upper funnel tactics. If you don't have strong organic positioning on your core terms or well-optimized Sponsored Products and Sponsored Brand campaigns, you aren't going to be able to capitalize on the upper funnel traffic you drive.

  • Not building a defensive ad strategy to compliment your upper funnel spend: If you’re running ads to drive awareness, your branded search will increase. But many brands don’t have a fully fleshed out defensive ad strategy in place, which means that competitors will advertise on their branded search and steal that traffic. You’re just subsidizing your competitor’s sales.

  • Misunderstanding attribution between DSP and Sponsored Products: Many brands are hesitant to use DSP because they believe it will cannibalize their Sponsored Products sales. They believe that if DSP-attributed sales are strong, they’re serving ads to people who would have bought from them anyway. By using DSP, you can target consumers who may consider the brand for the first time, reaching relevant audiences through unique placements compared to Sponsored Products, both on and off Amazon. Additionally, you have the added refinement of excluding anyone who has already viewed your brand's product pages.

Ultimately, it’s impossible to drive a full funnel marketing strategy without DSP and AMC. Early upper funnel movers on Amazon will win mindshare, but results won’t come in a day.

Understand and embrace the upper funnel, but don’t forget about the revenue-driving activities that got you to where you are.

Case Study: Increasing Branded Search 453%

One of our clients used a combination of Sponsored Products advertising levers to reach middle and lower funnel customers, effectively dominating their category of Cooking & Baking Grocery Supplies on Amazon.

However, the brand lacked a full funnel strategy. Channel Key launched Amazon DSP Lifestyle Audience campaigns to target new customers off Amazon who are likely to convert, as well as Conquesting Audiences to reach customers browsing and purchasing competitor products.?

Within three months, our client saw a 453% increase in brand searches on Amazon. In total, our client’s full funnel strategy resulted in a 41% YoY increase in sales.

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Excited to dive into this Amazon strategy newsletter! Dan Brownsher

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Peter Quadrel

Incremental New Customer Growth for Premium & Luxury Brands | Scale at the Intersection of Finance & AI Powered Advertising | Founder of Odylic Media

1 年

Looking forward to reading your insights on Amazon trends for executives! ??

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Marc Sartele

Owner | Technology & Business Growth Specialist

1 年

Excited to dive into your newsletter! Looking forward to gaining insights on Amazon strategy.

Henri Roux

The Funnel Master ???? | Master of Sales Funnels | Elevating Your Business with Strategic Funnel Building ????

1 年

Exciting stuff, looking forward to diving in! ??

John Lawson III

Host of 'The Smartest Podcast'

1 年

Nice move into newsletters! Share strategies for Amazon's rising ads like a pro???

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