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?
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.