On Amazon, Marketers Rely Most on Sponsored Product Ads - eMarketer

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On Amazon, Marketers Rely Most on Sponsored Product Ads

Keyword-targeted search ads dominate, but the use of display ads is growing

November 1, 2017

In an analysis of activity on its platform during Q3, marketing solutions provider Merkle found that the vast majority (82%) of ads served on Amazon were of the sponsored products variety. But product display ads are making gains, growing 112% over the previous quarter.

Amazon Ad Benchmarks in North America: Ad Spending Growth and Share, by Type, Q3 2017 (among campaigns analyzed by Merkle)

Amazon’s ad offerings come in three distinct styles: sponsored products, headline search ads and product display ads. While sponsored products and headline search ads rely on keywords and are served in search results, product display ads are closer to a display ad format and show up both in searches and on product pages.

Merkle’s data also shows that sponsored product ads deliver the highest sales per click (SPC). Both headline search ads and product display ads saw significantly lower SPC rates during Q3.

However, when it came to clickthrough rates (CTR), headline search ads delivered the highest rates, while sponsored product ads and product display ads were roughly on equal footing.

Amazon’s advertising business is helping the ecommerce giant to diversify its revenue stream. In its recent Q3 earnings statement, the company reported revenues of more than $1.12 billion worldwide in its “other” category, which includes “certain advertising services and our co-branded credit card agreements.”

While Amazon still doesn’t break out its advertising revenue on its own, there’s a good chance that most of the revenue in the “other” category is derived from ad sales. In fact, during the company’s earnings call, Amazon CFO Brian Olsavsky said ad revenue had seen year-over-year growth of 58% in Q3.

eMarketer projects that Amazon’s net digital ad revenues will total $1.65 billion this year, a 48.2% bump over last year’s figure. We also expect Amazon’s ad revenues will grow significantly to $3.19 billion by 2019.

Part of Amazon’s ad growth is because the company’s own search service is increasingly displacing Google as a starting point for the path to purchase. eMarketer estimates that Amazon’s net US search ad revenue growth will hit 48.2% this year, well outpacing the 17.5% growth rate expected for Google.

eMarketer’s recently published report, “Amazon Advertising: Reconsidering the Retail Platform,” details Amazon’s advertising options and its emerging role as a marketing platform. eMarketer subscribers can access the report here. Nonsubscribers can purchase the report here.

—Rahul Chadha


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