Additional Contributor: Gitty Jamizada, Manager, Digital Media
Amazon’s advertising business is accelerating rapidly, outpacing even the growth of Amazon Web Services (AWS) and online sales. In Q1 2023, Amazon’s ad revenue grew by 21% year over year, reaching $9.5 billion. This surpassed Amazon Web Services (AWS) at 16% and online sales at 3%, generating $21.4 billion and $51.1 billion, respectively.
Additionally, Insider Intelligence expects Amazon’s share of online ad sales to increase from 11.7% in 2022 to 12.4% this year. Although advertising currently forms a smaller portion of Amazon’s revenue compared to online sales or AWS, these figures highlight the growing significance of Amazon’s ad business to its overall operations. They also predict an escalating investment by Amazon in the tools and services required to sustain this growth.
With Amazon doubling down on its advertising capabilities, we help companies navigate its offerings and reporting and attribution capabilities, like Amazon Marketing Cloud, to build clear pictures for better performance. Here’s how.
An Overview of Amazon Advertising Offerings
Amazon’s ad business growth hinges on one primary factor: Amazon delivers results for advertisers. Regardless of the ad type utilized — be it Sponsored Product, Sponsored Brand, Sponsored Display, or even ads served through Amazon’s Demand-Side Platform (DSP) — we’ve seen uniformly positive results on Amazon campaigns. For example, our expertise combines with Amazon’s ready-to-buy audience to drive Return on Ad Spend (ROAS) that is typically at least 400%, whether the product is a $7 bottle of boat cleaner or a $3,000 backyard playset. These kinds of results greatly impact your company’s bottom line.
Let’s unpack how that can happen. For those less familiar, here’s a brief overview of Amazon’s offerings:
These ads focus on promoting individual product listings and appear within search results and product detail pages. They display a product image and title. Users clicking on the ad are directed to the product detail page for the specific item.
Designed for brand visibility and awareness, these ads feature a custom headline, logo, image, and multiple products. They can appear in prominent positions within search results and on the top of the page. Users who click on a Sponsored Brand ad are typically directed to a customized landing page featuring a range of products or the brand store from the brand.
Amazon Sponsored Display ads appear on and off of Amazon and generally feature a single product, a headline, and custom image. They aim to capture the attention of potential customers and redirect them to the product detail page on Amazon.
The Amazon DSP provides access to a full range of ad units, including Connected TV (CTV). It also offers more advanced targeting capabilities than Amazon Sponsored Display, allowing advertisers to blend Amazon’s comprehensive customer data with external data sources. This enables them to reach specific audience profiles and target them across the broader inventory available through the DSP.
These offerings are backed by measurement capabilities that have advanced from routine reporting to the powerful clean room solution of Amazon Marketing Cloud (AMC).
Amazon’s Reporting and Attribution Capabilities
Amazon has always provided basic reporting and attribution capabilities. For instance, Amazon Attribution allows advertisers to track the sales and revenue generated by ads on other platforms that lead to an Amazon Store. So if a marketing team spends $50,000 on Google Ads that land on Amazon, we can see the sales generated by that $50,000 and calculate ROAS. However, Amazon has long recognized the need to enhance its capabilities to seize a larger share of the overall ad spend, particularly in the programmatic space.
In response to this growing need, Amazon has recently made the Amazon Marketing Cloud (AMC) available to all users. AMC is a critical tool for Amazon as it enables advertisers to fully assess the impact of each dollar spent across Amazon’s many available ad units. This new functionality will likely attract more advertisers to shift some or all of their budget from DSPs like The Trade Desk or DV360 to Amazon’s DSP, as advertisers will be able to not only use Amazon’s incredible amount of audience data for targeting but will now also be able to generate the detailed reporting they’re used to with other DSPs.
How to Leverage Amazon Marketing Cloud (AMC)
A secure, privacy-friendly, dedicated cloud-based measurement and analytics solution, AMC is a clean room solution that enables users to develop custom analytics and reports based on their specific goals, strategies, and Amazon advertising channels. Advertisers can create custom queries that help answer vital questions and overcome measurement challenges by returning highly detailed audience data beyond what traditional reporting provides. AMC’s ability to look across multiple data sets offers marketers the ability to measure and attribute sales across all of Amazon’s advertising channels. For example, advertisers can use AMC to create reports such as:
- Full-funnel, cross-channel path to conversion reporting.
- Identifying which product, message, image, ad channel, audience target, etc., is most effective at inducing new customers to make a purchase.
- Determining the most effective sequence of messaging and/or ad channels.
- Analyzing which combinations of ad platforms and units are most successful at driving sales.
- Assessing the effectiveness of various frequency levels both within a single channel and across multiple channels.
Here’s a real-life example. AMC can answer the question: “Will adding CTV increase sales without eroding ROAS for a company that sells vitamins?” This question and more can be solved with AMC — and many companies can benefit from these answers.
Which types of companies should use AMC?
AMC is ideally suited for companies seeking a holistic view of their Amazon advertising performance across all Amazon channels. However, advertisers must have Amazon DSP ads running or planned in order to access AMC. Additionally, to maximize the benefits of AMC, advertisers should have access to a resource familiar with structured query language (SQL), the standard language for relational database management systems. As with any solution, it has some limitations.
What are the limitations of AMC?
While AMC offers many benefits, marketers should be aware of its limitations. Currently, AMC can only evaluate the effectiveness of Amazon’s ad products, such as Sponsored Brand and the Amazon DSP. As of now, AMC cannot incorporate data from other companies’ ad platforms. This should be a consideration as marketers consider their work with AMC.
Take the next step.
Amazon’s rapidly growing ad business presents new opportunities for marketers to reach and ignite their target audiences. Holistic measurement solutions such as Amazon Marketing Cloud enables advertisers to gain deeper insights into their ad performance and make data-driven decisions to optimize their ad spend. Amazon’s advertising star is on the rise. As Amazon continues to invest in its ad business, stay informed about the latest developments and leverage these tools to your advantage. As always, the key to successful advertising on Amazon—or any platform—is to continually test, learn, and adapt.
Harnessing Amazon’s advertising tools within the evolving media landscape is only one part of a data-centric, performance-driven strategy, giving you the power to know and do more. Dig deeper into synergies within your paid and organic search strategy, or let’s talk about how to achieve more for your marketing — and your business.