Amazon 2021 Advertising Benchmarks: Competitive Insights
In a hypercompetitive eCommerce world, Amazon’s ad revenue has surpassed its subscription services, becoming the fastest growing sector in the digital marketplace. This article offers insights and recommendations on Amazon advertising from 2021 to help brands outperform their competitors in 2022.
Based on the comprehensive analysis used to create DataHawk’s 2021 Advertising Benchmarks Report, this article examines Amazon advertising KPIs related to four types of Sponsored Ads: Sponsored Products, Sponsored Brands, Sponsored Brand Video, and Sponsored Display. Findings are supported by insights from 297 US-based active DataHawk user accounts throughout 2021. For a more in-depth analysis of the forthcoming findings, reference Datahawk’s 2021 Advertising Benchmarks Report.
It comes as no surprise that Amazon is one of the most popular digital advertising platforms the tech world has seen in almost a decade. According to Reuters, Amazon recently reported ad revenue of $9.7 billion for the fourth quarter of 2021, up 32% from the previous year. This article, along with its accompanying report, seeks to help Amazon brands recognize ad campaign efficacy to increase their quarterly ad revenue.
- Understanding Amazon Ads
- Amazon Advertising Benchmarks
- When Do Amazon Merchants Increase Ad Spend?
- Weekly Median ACoS
- Weekly Median Conversion Rate
- Prime Day Advertising Insights
- Cyber Five Advertising Insights
- Overview of Amazon Advertising Spend by Marketplace
In a survey conducted by Statista, among a thousand respondents that sell products on Amazon, 73% said that they use Amazon ads for marketing their products. Since then, the number has only continued to rise, revealing substantial interest in the platform’s advertising offerings. With the growing popularity of Amazon ads, brands are increasingly concerned with the performance of their ads in comparison to their competitors.
Understanding Amazon Ads
Amazon ads can help brands achieve their business goals by expediting the process that drives sales and promoting engagement throughout the various stages of their customer’s journey. However, different types of Amazon ads serve different purposes. Therefore it is paramount that brands understand the ways in which each ad type reaches prospective customers.
Amazon Sponsored Products
Sponsored Product ads allow customers to discover products seamlessly by appearing on search results and related product pages. They are designed to reach shoppers of high purchasing intent. This ad campaign’s popularity stems from its low cost of entry and influence on product discovery. Sponsored Product ads actively promote products to Amazon shoppers who are searching using related keywords or browsing comparable products. They are billed on a CPC basis, which means that brands have the autonomy to select the bid price of their choice and only pay for the ad when customers click on it.
Amazon Sponsored Brands
Sponsored Brands, similar to Sponsored Product ads, focus on increasing traffic and building brand awareness by targeting customers who have a high intent to purchase. They are customizable ads that contain a headline, logo, and set of products. These ads are featured both above and within product detail pages and at the bottom of the search results page. Upon clicking on the brand logo featured in the ad, shoppers are redirected to either a store or a custom landing page. Alternatively, if the shopper clicks on the advertised product, they will be brought to the product page directly.
Amazon Sponsored Display
Sponsored Display ads engage prospective customers by expanding the reach and visibility of advertising campaigns as they allow brands to place Amazon ads on third-party websites. Merchants can use Display ads, in particular, to feature products to audiences who are browsing related products and similar categories. They appear in multiple placements, such as on product detail pages, brand websites, or custom detail pages.
Amazon Sponsored Brand Video
Sponsored Brand Video ads also work to boost visibility by the way in which they stand out as auto-playing videos featuring single products on search results pages both on and off Amazon. In a post-pandemic world, an overwhelming number of audiences indulge in streaming services. Sponsored Brand Video ads provide Amazon merchants an outlet to reach these audiences and showcase their brand and products alongside their favorite movies and shows.
Amazon Advertising Benchmarks
The table below reveals a breakdown of DataHawk users’ 2021 performance in Sponsored Products, Sponsored Brands, Sponsored Brand Video, and Sponsored Display. By segmenting the table into quartiles, merchants can obtain perspective as well as guidance on how Amazon businesses performed in 2021. Furthermore, such metrics can serve as a valuable benchmark for assessing performance.
*Note that the percentage beneath the campaign type indicates the share of DataHawk accounts using the specific ad type.
How Are Brands Allocating Their Ad Spend?
Findings suggest that among the four ad types, in 2021, Amazon brands relied substantially on Sponsored Product campaigns to advertise their products. The chart below reveals that 81% of Amazon brands’ advertising budgets were allocated exclusively to Sponsored Products, with the smallest share distributed to Sponsored Display ads.
It very well could be that brands favored Sponsored Products over other campaign types because they target shoppers with high purchasing intent. Consequently, by targeting such shoppers, brands increase the likelihood of making a sale. Sponsored Product ads also drive discoverability and, as apparent in the table above, have the highest conversion rates.
When Do Amazon Merchants Increase Ad Spend?
As stated previously, Sponsored Products take the lion’s share of monthly ad spending throughout 2021. Nevertheless, the distribution across the four types of ads fluctuated, though only incrementally. For instance, Amazon merchants had a tendency to increase their ad spend on Sponsored Brands Video ads before and during significant Amazon shopping events such as Prime day (June) and the pre-holiday shopping rush.
Weekly Median ACoS
ACoS, also known as the inverse of RoAS, is a KPI used to demonstrate the ratio of ad costs to ad sales in order to track advertising expenses in relation to revenues. It allows brands to evaluate the performance and profitability of their PPC campaigns. Essentially, a high ACoS is the equivalent of a less profitable campaign. Therefore, brands should keep their ACoS low and RoAS high to maintain lucrative Amazon ad campaigns.
The graph below represents the weekly median ACoS by sponsored type segmented by quartile. This graph helps brands compare their own ACoS by assessing the percentage of sales they made from each sponsored ad campaign compared to the different quartiles. To interpret the graph in a way that yields the most prominent insights, reference the metrics below to determine which quartile your brand epitomizes.
Bottom Quartile: 20.3%
Top Quartile: 41.9%
Weekly Median Conversion Rate
The graph below demonstrates the weekly median conversion rate by sponsored type segmented by quartile. Refer to the metrics below to determine which quartile your brand represents.
Monthly Conversion Rate
Bottom Quartile: 6.94%
Top Quartile: 17.05%
Unlike the insights gleaned from the previous graph, which demonstrate that Sponsored Brand Video ads and Sponsored Brand ads follow a similar pattern, the metrics in this graph reveal that Sponsored Product ads and Sponsored Brand Video ads follow a comparable pattern and yield the highest conversion rate. Moreover, Amazon merchants in the bottom quartile should prioritize Sponsored Brand Video ads over Sponsored Product ads as they generate more promising results.
Ultimately, conversion rates are significantly lower for Sponsored Displays ads. This may be because Sponsored Display ads are designed to feature products to audiences who already know what they are searching for and are not located on search results pages. Therefore, shoppers might be simply less likely to click on an advertisement for an alternative, albeit similar, category. However, there are instances where Sponsored Display ads have a competitive edge, though they should be leveraged strategically.
Prime Day Advertising Insights
This section uses data collected from 292 anonymized DataHawk accounts analyzed for the 30 days before and 30 days after Prime Day 2021. According to the graph below, with the exception of Sponsored Display ads, ad campaign efficacy increased relevantly during Prime Day. Sponsored Brand ads, in particular, appeared to be the most lucrative campaign type during Prime Day with a 22.4% increase in RoAS.
Cyber Five Advertising Insights
Interestingly, RoAS did not increase as much throughout Cyber Five compared to Prime Day. While Sponsored Brands Video yielded the highest return with an increase of 17.4%, RoAS for Sponsored Products increased trivially.
Additionally, in the same way that RoAS decreased by 3.9% during Prime Day, return on ad spend also diminished, though more significantly, during Cyber Five. These insights indicate that perhaps Sponsored Display ads are less efficient during specific online shopping events such as Prime Day and Cyber Five.
However, Sponsored Display ads may be more efficient during less festive times of the year when consumers are simply browsing and are more likely to click on an ad that features a product related to the one they are shopping for.
Overview of Amazon Advertising Spend by Marketplace
This section analyzes, compares, and contrasts Amazon advertising data, such as CTR, CPC, and RoAS, from the following marketplaces: the United States (US), Great Britain (GB), Germany (DE), Canada (CA), and France (FR).
*Note that local currencies apply.
The three graphs below demonstrate three different advertising-related metrics. The graph titled “Average CTR by Marketplace” indicates that, although marginally, CTR is highest in both the German and Canadian marketplaces.
The graph “Average CPC by Marketplace” reveals that CPC is the most expensive in Amazon’s US marketplace, followed by Great Britain and Canada. In terms of return on ad spend, the graph “Average RoAS by Marketplace” shows that among the five marketplaces analyzed, Canada generates the highest RoAS of 4.20x, followed by France.
For instance, while brands from the US and British marketplace allocate the least amount of their advertising budget to Sponsored Display ads, brands in the other marketplaces spend the least on Sponsored Brands Video ads.
The US, for example, is the only marketplace that allocates the most ad spend to Sponsored Brands Videos. This is perhaps because consumers in the US are simply more receptive to video ads than consumers in Europe. These findings speak to the importance of understanding one’s target audience to establish which ads have the highest chance of converting prospects into customers.
This report was designed to help Amazon merchants craft a strategic data-driven advertising strategy to increase profit margins. Analyzing the ebbs and flows of sponsored ads performance can empower eCommerce sellers to reach relevant consumers at appropriate times throughout the year.
A robust advertising strategy is defined by statistics. One of the most intelligent ways to gauge the prosperity of one’s advertising strategy and campaigns is to assess and compare Amazon advertising benchmarks to establish where your brand’s performance stands in relation to your competitors.
Reference DataHawk’s 2021 Advertising Benchmark Report for a more in-depth analysis of the findings revealed above and more actionable solutions on creating the most successful Amazon advertising campaign strategy.