Why Amazon is Now a Good Option for Your Online Advertising

Amazon Markhalle

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25. July 2018

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Amazon is the world's largest online retailer in terms of annual sales and market share. With 55% of all Internet users [1] in the USA starting their online product search at Amazon, it is often the first point of contact in the online purchase process. Additionally, products are searched for four to five times more frequently on Amazon than on Google.[2].

If these aren't good enough reasons for you to advertise on Amazon, there is also the average conversion rate. In most online shops, a good conversion rate is considered to be anywhere between three and five percent, but at Amazon the average conversion rate is as high as 10%. Another proof of the power of Amazon, is the fact that Amazon's sales currently account for 40% of the total sales volume of the German e-commerce market.[3].

Search Engine Marketing with Amazon

There are two ways for retailers to place products on Amazon: Either organically, which means spending time optimizing text, pictures and other relevant details, or to pay for product placement. These so-called "sponsored products" are a form of advertising that is very similar to the ads served by Google AdWords. Just like in Google AdWords, the merchant only pays when an ad is clicked

Where are Amazon Ads placed?

There are two different types of placements on Amazon: The ads appear either in the product search or on the product detail page.

What Types of Ads can be chosen from?

There are three different types of ads on Amazon, each of which is displayed to the user in different stages of the purchase process.

Ad-Type 1: Headline Search Ads

Headline Search Ads

Ad-Type 2: Sponsored Product Ads

Sponsored Search ads

Sponsored product ads have the highest click through rate of all the ad types. At first glance, they look like organic search results, with only a small "sponsored" label marking them as ads. Sponsored product ads have the highest reach, but also the highest competition. This form of advertising is particularly suitable for new products that do not yet have a good organic position.

Ad-Type 3: Product Display Ads

Product Display Ads

Product display ads are encountered by the customer in the final phase of the purchasing process, namely directly on the product page. Product Display Ads are placed either next to or below the "Add to Shopping Cart" button. The advantage of this ad format is that the user is already so far into the purchase process that they have shown intent to buy. However, this can also be disadvantageous, as the user is already in the process of adding another product to the shopping basket and can thus easily overlook the ad. This format is not keyword-based, but makes use of the interest oriented Amazon algorithm to decide on placements. This form of advertising is only available to brand manufacturers or authorized dealers.

Use your Advertising Budget on Amazon Now

If you are already an Amazon dealer, you should definitely think about paid advertising. Why? Paid advertising gives your products far more visibility, especially in the case of new products, as products with a short sales history generally do not make it into the top positions organically. These top positions in the Amazon search results are closely correlated to bestsellers. This means that the increased attention and higher rankings made possible by Amazon ads result in more revenue for you.

If paid advertisements receive a good click through rate, it can also have a positive effect on the organic ranking factors and see the product rises in the organic search results. Another use case for paid advertisements, is their ability to promote sales, which is why seasonal campaigns (Christmas, Easter, Mother's Day) are particularly suitable. Another scenario where sales can also be promoted through paid campaigns, is where a product is going to be removed from the range i.e. an end of line sale.

At present, click prices at Amazon are still significantly cheaper than at Google. At first glance this seems a little strange as you would expect it to be the other way around. The user researches on search engines in advance, before ending up at Amazon, at which stage they already have a product in mind and are already at an advanced stage of the purchasing process. As a result, research within Amazon is usually only carried out on various models or dealers. This makes Amazon users more economically interesting, which should in turn result in high click prices. However, as the demand is not yet that high, the cost of clicks on Amazon are still lower than on Google. Retailers still see Amazon as a marketplace and not as a search engine.

Advertising on Amazon is increasingly becoming a must for retailers and brands. As it is still cheap though, starting now means that you can gain valuable experience without having to invest too much marketing budget. Are you ready to switch to Amazon? If you have any question, please don't hesitate to contact me. I would be happy to hear from you.


[1] Quelle: BloomReach Studie, 2016

 

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