Amazon is scheduled to report earnings today after the market closes. Merkle, which released an analysis of Amazon’s ad growth earlier this week, suggests advertisers are spending much more on the platform.
Amazon Sponsored Products format grew 35% in the third quarter of 2019, while sales generated by the format grew 69%.
A significant portion of Amazon's sales came in during the last Prime Day, Merkle says, when daily sales were 900% higher than average.
Teikametrics analysts agree. In March 2019, the company released an hourly bidding algorithm for Amazon. Data based on 2,100 products sold by its customers in the Home and Kitchen category outlined in the study shows that advertisers on Amazon increased their average ad spend for individual products by 117% on Prime Day. This increase, in part, drove up the average cost per click for Home and Kitchen products by 15.9%.
Metrics used in the analysis include organic sales, ad-derived sales, ad spend, and ad clicks.
The Prime Day period in the study represents data collected on July 15 and 16, 2019. The ‘non-Prime Day’ period in the study represents data collected over the four Mondays and Tuesdays prior to Prime Day.
The data shows that consumers buying products from this category converted on ads at roughly the same rate as the prior four-week average, with conversion rates rising only 1.6%.
This emphasizes that the substantial overall revenue growth in the category was largely propelled by organic sales volume, as the average change in total advertising 04 cost of sale was -69%, while the average cost of sales fell by 2%, according to the report.
Andrew Waber, Teikametrics' director of insights, explains that the fact “TACoS dropped more precipitously between the two periods, as compared to ACoS, shows that organic sales were driving a lot of that added volume.”
The cost per click during Prime Day for products in the Home and Kitchen category came in at $0.78 compared with non-Prime Day at $0.67. Conversion rates were nearly the same, 12.1% for Prime Day and 11.9% for non-Prime Day.
For products in the Clothing Shoes and Jewelry category, from Telkametics data released last month, Amazon Advertisers saw a 540% increase in revenue during Prime Day 2019. The average ad spend for these products in the category rose by 33%.
The average CPCs and click-to-purchase conversion rates for the category on Prime Day remained flat, suggesting significant increase in revenue was driven primarily by a major rise in the number of consumers visiting and buying on Amazon.
The data also suggests an increase in organic sales on top of advertising, as the average change in TACoS was -64%, and ACoS fell by an average of -3%.