Amazon Generates Highest Return on Media Spend for Majority of Brands Selling on the Platform, Feedvisor Study Finds
Nearly half of brands advertising on Amazon see at least a 7x return on spend
Feedvisor, the AI-powered optimization and intelligence platform for brands and large sellers on Amazon, unveiled its 2020 analysis on the dynamic relationships between brands and Amazon. The report, Brands and Amazon in the Age of E-Commerce, examines the goals, sentiments, and strategies of over 1,000 US retail brand leaders, and outlines how they navigate and position themselves in an Amazon-led e-commerce landscape.
The study found that nearly three-quarters (73%) of brands selling on Amazon are advertising on the platform, reflecting a 26% increase from last year. As Amazon works to become the No. 2 global leader in digital advertising, the analysis shows that nearly all brands (98%) using the company’s advertising solutions find them valuable. Additional findings include:
- Amazon drives greater ROI than Google and Facebook: A majority of brands selling on Amazon (59%) said that the platform generates their highest return on media spend, followed by Google (22%) and paid social (17%). More than half of brands advertising on Amazon (55%) said its Sponsored Products solution drives their greatest return on the channel.
- With more confidence in Amazon Advertising, brands invest accordingly: The majority (65%) of brands advertising on Amazon spend at least $40,000 each month, up from 49% last year. Further, nearly half (47%) of brands see at least a 7x return on their Amazon advertising spend, reinforcing why nearly all (93%) brands selling on Amazon agree that advertising and branding options are the best part about the platform.
- Walmart.com closely follows Amazon in advertising spend: A majority (70%) of brands are advertising on Walmart.com, including 74% of the brands currently selling on Amazon. More than half of brands (58%) spend at least $40,000 each month advertising on Walmart.com, and the trend is similar for brands also selling on Amazon (62%).
“Amazon has significant influence over the modern e-commerce experience — our previous analysis reveals that Amazon is where two-thirds of shoppers start their product search and where three-quarters go when they are ready to make a purchase,” said Dani Nadel, President and COO, Feedvisor. “While the data shows that Amazon Advertising is already driving positive results for many brands, it remains an untapped resource for many others. As Amazon continues investing in its advertising solutions, brands should seize the opportunity to reach the company’s highly engaged, loyal consumer audience at every stage in their shopping journey.”
Many brands selling on Amazon are evolving their strategies to capitalize on the platform’s multitude of benefits. In fact, nearly half (47%) of brands selling on Amazon today are using both first-party (1P) and third-party (3P) channels, a 38% increase from last year. Additionally, nearly three-quarters (72%) of brands with 1P selling relationships are interested in expanding to Amazon’s 3P marketplace. The study also revealed:
- Brands leverage Amazon as a full-funnel purchase channel: Similar to the way consumers use Amazon for every step of their purchase journey, brands utilize the platform to fulfill their cross-funnel business goals — 62% use Amazon to drive sales, 60% to acquire new customers, and 58% to build brand awareness. In addition, over half (52%) of brands selling on Amazon put their most popular products on the platform in tandem with their own channels.
- Brands go to Amazon to understand their competition: Two in five brands selling Amazon (42%) said identifying competitors is their top strategy on the platform, surpassing their own channels and other e-commerce marketplaces. When asked about their biggest source of competition, over one-third of brands (37%) said national or global brands, followed by direct-to-consumer brands (25%) and Amazon’s private label brands (21%).
“Our analysis shows that more than one-third of brands currently lacking an Amazon presence want to start selling on the platform within the next three years. However, many brands said they do not know where to start,” said Victor Rosenman, Founder and CEO, Feedvisor. “Whether you are a veteran global brand or an emerging D2C company, Amazon is a complex, ever-evolving platform with its own rules for success. Our AI-powered technology and team of experts will help you develop a successful, cost-effective strategy for every unique business objective.”