Amazon Ads: Retail Growth in the Digital Age

Amazon Prime Day is here again!

You know what that means?

It’s time for us to buy discounted products that we don’t need to fill a void that doesn’t exist.

In fact, the only thing that we’ll be filling is Jeff Bezos’ already bulging pockets.

Why do we do this?

FOMO (fear of missing out).

To get more technical, Amazon leverages what is known as the scarcity principle for this event.

In behavioural economics, the scarcity principle proposes that people assign more value to resources or opportunities that are perceived as scarce or limited in availability.

e.g. A HUGE sale for a LIMITED time ONLY!

Loads of brands do this.

But Amazon does it best.

Whilst the scarcity principle deserves an entire newsletter dedicated to it in the future, I want to use Amazon Prime Day as a springboard to discuss something a little different.??

Instead of exploring the mindless consumerism triggered by this annual event, this newsletter will explore how businesses can use and cash in on Amazon.

In particular, how businesses can grow using Amazon Ads.

The Overreliance on Google Ads

According to a study by Feedvisor , 55% of product searches now happen on Amazon, NOT Google.

Hear that eCommerce businesses?

And yet, in my initial conversations with most of our retail clients, one of the things that almost always rears its head is an overreliance on Google Ads.

The Google:Amazon budget split is normally something like 80:20 or – sometimes – they aren't running Amazon ad campaigns at all.

Google Ad is great, sure.

But the platform shouldn't be used in isolation if you want to significantly increase your market share and drive serious revenue growth.?

While Google is the dominant force in search, Amazon has emerged as the dominant force in product searches.

It’s transformed into its own eCommerce-centric search engine.

Herein lies the power of Amazon Ads…

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Purchase Intent & Behaviour

Users searching on Amazon are typically already in a shopping mindset and actively searching for products.

Meanwhile, Google users could be searching for many things other than products.

The result of this discrepancy?

Amazon ads reach users who are more likely to convert into buyers – those with a higher purchasing intent.

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Conversion Rate

Even though Google offers a dedicated ad type for promoting products – Google Shopping ads – Amazon's purchase-driven audience means that its ads have a higher conversion rate.

Amazon’s Sponsored Products and Sponsored Brands ad types, on average, have over 3X higher conversion rates than Google Shopping ads.

The benefits of this are obvious.?

Higher conversion rate = more sales at a lower cost.

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Cost-per-Click

Higher conversion rates are not the only way that Amazon PPC eclipses Google PPC in terms of campaign efficiency and effectiveness.

On average, Amazon ads also have a significantly lower cost-per-click (CPC).

According to a recent study, the average CPC on Amazon is $0.89, whilst the average CPC for Google ads within the eCommerce industry is $1.16.?

A lower CPC allows advertisers to stretch their advertising budget further.?

Coupled with higher conversion rates, this has a serious impact on ROI.

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Key Takeaway

The goal of this newsletter is not to undermine the power of Google Ads.

Rather, it’s to highlight the areas where Amazon Ads surpasses Google Ads as a platform.?

The two should nonetheless be used in tandem.

In my experience, however, Amazon ads are currently being overlooked and underused by many eCommerce businesses.

Luckily for those reading this newsletter, this means that investing heavily in this platform offers a unique opportunity to:

1. Capture new customers
2. Grab a bigger market share?

All whilst your competitors are fast asleep.

If anything has caught your attention in this newsletter, please feel share your thoughts in the comments or reach out to me directly on LinkedIn!