Focus Turns To Retail Media And Less Expensive Items For Remainder Of Year

Retailers now have data companies analyzing advertising trends across their respective networks to determine the outcome of sales as inflation takes hold. Pacvue, an ecommerce advertising and intelligence platform, has released its Q2 2022 CPC Report, which provides a look at the advertising and major retail media trends across Amazon, Walmart and Instacart.

The report uses proprietary data sourced from the Pacvue and Helium 10 proprietary databases to examine advertising performance data from thousands of advertisers in the United States, across every major product category.

“We saw a huge blip during in Q4,” said Melissa Burdick, co-founder and president at Pacvue. “If you take sponsored product, which is what most people use, it went from $1.22 to $1.36 in Q4.”

A year ago, it rose a mere $0.2, she said. Also, return on ad spend (ROAS) continues to decline, which is normal for a more mature platform.

The cost-per-click on Amazon remained relatively flat in Q2 2022. For Amazon Sponsored Products, the average CPC came in at $1.24 -- falling 0.8% quarter-over-quarter (QoQ) -- and increased just 1.6% year-over-year (YoY).



CTR for Sponsored Products ads fell 13.5% QoQ to an average 0.32%, showing a decline after slight improvement in Q1 2022, when it rose 5.7% to 0.37%. Sponsored Products CTR experienced a slight decline year-over-year with a total decrease of 5.9%.

CTR for Sponsored Brands ads increased 10.3% quarter-over-quarter -- up to 0.64% -- and had a strong increase of 33.3% year-over-year.

In Q2, top searches on Amazon shifted back to holiday-related items, such as Mother’s Day Gifts, Easter Basket Stuffers, and Father’s Day Gifts. In the Clothing, Shoes & Jewelry category, top searches included Summer Dresses for Women 2022, Women’s Summer Tops, and Swimsuit Women.

“One of the things that we're just seeing in the market is the impact on inflation,” she said. “Some of the things happening in the market are just a profit squeeze. Costs are increasing.”

This year top items on Amazon Prime Day included detergent, trash bags, and Frito Lay chips, because Amazon offered 30% off, she said.

Ad spend on Walmart increased 26.91% QoQ, but fell 3.82% YoY.

Walmart in Q2 made two significant changes to their bid auction strategy — enhanced search relevancy resulted in more opportunities for ads to serve up, and second-price auction resulted in more efficient cost per clicks (CPCs) for brands.

As a result, CPCs in Q2 came in on average at $0.80, falling 23.08% QoQ —  down 29.20% year-over-year.

ROAS, at $4.83, rose 71.28% QoQ and 82.95% YoY. The enhanced search relevancy seems to have positively affected ad engagement, with click-through rates up 43.33% QoQ, according to the report.

Ad spend on Instacart fell 7.64% QoQ and 10.43% YoY. Average CPC in Q2 was $0.96, representing a 9.09% increase QoQ and a 9.43% decrease YoY. The average ROAS of $4.69 saw little change —  just down slightly, at 2.29% QoQ. CPCs for Sponsored Ads fell 9.4% year-over-year.

Instacart Sponsored Ads showed a 5.41% increase QoQ, with the CPA rising to $1.17 in Q2 2022. But this represents a total decrease in CPA of 2.5% year-over-year.

When asked how marketers will respond this holiday season, starting with back=to-school, when it comes to high inflation, Burdick said, “I think that it's a challenge.”

Instead of buying high-priced luxury items, consumers will buy lesser-priced items, she said.

”I think that there's going to be more of a focus on less luxury items, maybe more cost-effective or efficient items, grocery will probably be another star as well,” she said.

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