Report: Most Brands Seeing 4x ROI on Amazon Advertising

To be or not to be an advertiser on Amazon? It’s among the most pressing questions for ecommerce brands, and while the answer seems obvious (yes), there are complicating factors as Amazon’s success expands the crowd trying to distinguish itself and its products on the platform.

With Amazon largely credited for the 115% spike in third quarter 2019 ecommerce ad spend, it’s no surprise that Feedvisor’s annual brand report shows 75% of brands selling on Amazon also advertise on the platform.

It’s a smart spend, based on the results of Feedvisor’s 2020 report, “Brands and Amazon in the Age of Ecommerce,” which finds 83% of those advertising there experience a four-fold return on ad spend (RoAS), and nearly half of brands reap a seven-fold RoAS.

Among other key findings of the report, which surveyed 1,000 retailers:

  • 73% of brands advertise on Amazon, up from 57% last year
  • 54% of brands on Amazon said ecommerce marketplaces are their greatest source of digital opportunity
  • 62% of brands use Amazon to drive sales, 60% to acquire new customers and 58% to build brand awareness
  • 52% of brands put their most popular products on Amazon in conjunction with their own websites or channels
  • 55% of brands believe sponsored products are the most valuable for RoAS from Amazon advertising, followed by sponsored brands (48%), sponsored display (44%) and Amazon DSP (37%)
  • 59% of brands selling on Amazon said the platform generates their highest return on media spend, followed by Google (22%) and paid social (17%)
  • 51% of brands on Amazon advertise consistently throughout the year
  • 36% of brands on Amazon advertise more during key shopping periods such as Prime Day, peak holiday season and/or other major holidays, while 9% do so exclusively during key shopping periods.
  • 74% of brands selling on Amazon also advertise on rival

All of that has more and more brands planning to get in the game. Feedvisor found 48% of brands not currently selling on Amazon are inclined to start this year, up from 26% in 2019. “This change signals how more brands are recognizing Amazon’s importance to their ecommerce strategy and are increasingly open to selling on the platform,” it said in the report.

Amazon represents more than half of ecommerce sales for 42% of brands, the report said, and between 26% and 75% of total online sales for 75% of brands surveyed. Eight percent of brands selling on Amazon gain 75% or more of their ecommerce sales come from the platform.

More than 60% of brands selling on Amazon spend more than $40,000 per month on Amazon advertising, a 33% increase from last year, and 38% spend more than $60,000 monthly.

Amazon advertising isn’t for everyone, though, with Feedvisor noting “several household brands — Nike, Ikea, and Birkenstock, among others — have chosen to end their direct business with Amazon.” Birkenstock, for example, was up in arms over knockoff copies of its signature shoes being sold on Amazon, while Nike decided in November to focus more on its DTC business, after a two-year test.

“Unfortunately, Amazon’s increasing popularity with consumers and sellers has its growing pains,” etailz CEO Kunal Chopra wrote in a recent Multichannel Merchant post. “The almost 3 million sellers flocking to Amazon makes capturing shoppers’ attention exceptionally challenging. Now, advertisers must spend more with a lower probability of conversion. In the last year, our data shows a 38% rise in the average CPC for sponsored product ads and a 36% fall in the average conversion rate. To stand out from the crowd, more brands are utilizing sponsored ads.”

The top alternative to Amazon advertising is Walmart. Feedvisor found 58% of brands spend at least $40,000 per month there.

“This reveals that brands spend nearly comparable amounts advertising on Amazon and Walmart, despite the infancy of Walmart’s ad offerings,” Feedvisor said in the report. “Of brands selling on Amazon, nearly a third (29%) spend between $41,000-$60,000 advertising on Walmart.”

Beyond Amazon and Walmart, 57% of brands rely on their own website for sales, according to Feedvisor, and 42% sell products at their own stores. Thirty-one percent of brands also sell on eBay, 30% on Walmart, and 16% on Alibaba’s AliExpress.

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