Commentary

What's An Amazon Ad Worth? More Than You Think

If you ‘re an air-conditioner holdout, last week’s heat wave probably convinced you to get one. And unless you’re my neighbor Al — who is still talking about the hot water heater he bought six months ago — you probably consider air conditioners boringly utilitarian, so you may have no brand preference, and decide to review air conditioner models, reviews and prices on Amazon.  

Amazon is ubiquitous, having become the comparison-shopping engine of choice for consumers. It is the world’s most valuable brand, according to Kantar, and was cited by eMarketer as the third largest digital media selling company in the U.S. 

Ads on its platform are powerful and, since Amazon is its own attribution ecosystem, those brands that are advertising within its walls will know precisely how many units they sell as a result. But is that all? 

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Not by a long shot. 

The phenomenon of online media having an impact on offline sales — or even online media in a single marketplace environment like Amazon having an impact on sales in any other marketplace — is not necessarily new. But, with brands moving more of their budgets to Amazon advertising, often at the expense of their media investment in Google and Facebook, it’s vital to know just how much Amazon platform ads impact both online and offline ROI. 

Analytic Partners recently did an analysis to determine what effect advertising on Amazon had on sales outside of Amazon. The study found that advertising on Amazon works much harder than some advertisers may give it credit for, and drives significant sales across other retail channels.

The report uncovered that, on average, more than half of the impact of Amazon advertising is actually on non-Amazon sales channels. In other words, advertising on Amazon helps drive Amazon and brick-and-mortar sales.  

In fact, up to 70%-90% of the impact of Amazon Display Ads is on non-Amazon sales channels.  Even Amazon Paid Search drives offline sales. Roughly half of the impact of Amazon Paid Search is on non-Amazon sales channels. 

The effect of advertising on Amazon goes well beyond the immediate time, place, and channel, and has a lasting impact on sales outside the ecommerce platform.  Naturally, the most results often tend to be on Amazon, but the impact on other retail channels — online and offline — remains significant. This is often even true for paid search on Amazon, given its destination as a powerful pricing/review search platform. The proportion of impact is heavily related to what percentage of a brand’s sales are on Amazon. This reinforces that marketing’s impact is often delayed and demonstrates the importance of comprehensive marketing measurement.  

If you are weighing the costs of advertising on Amazon, you need to develop careful strategies and measure holistically to capture the full value of those ads. There is no formula for allocating Amazon spend, as levels are dependent on business priorities and competitive actions. 

Additionally, Amazon is always changing: costs and promotions are constantly in flux, and brands with little recognition and an unusually high number of positive reviews can spring up out of the ether, so what works today may not be the same tomorrow. In this venture (as in all ventures), it is crucial to take a “test and learn” approach that captures all activity related to your ads, as well as, importantly, your competitors’ activity.  

Seeing a fuller picture of your marketing activity will enable you not only to sell more products – but also keep your cool.

3 comments about "What's An Amazon Ad Worth? More Than You Think".
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  1. Ed Papazian from Media Dynamics Inc, July 24, 2019 at 2:59 p.m.

    All very interesting---and possible---but hard to accept until we learn how the findings were derived---or were they statistical quesses?

  2. Joseph LaSala from Analytic Partners, July 25, 2019 at 9:53 a.m.

    Ed - you can see the full report here: https://analyticpartners.com/resources/roi-genome-omnichannel-amazon-report/ 

    Let us know if you have any questions after reading it

  3. Ed Papazian from Media Dynamics Inc, July 25, 2019 at 10:51 a.m.

    Thanks, Joseph. I tried to access the report but every time I start to read it, it disappears from view. Am I doing something wrong?

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