Source: multichannelmerchant.com, November 2019
Ecommerce ad spend rose 115% in the third quarter compared to last year, and was up 51% over Q2, driven largely by Amazon, a seasonal surge for Prime Day and a strong back-to-school season.
The Q3 2019 Digital Advertising Benchmark Report from Marin Software, a provider of digital marketing software, also showed that mobile continues its dominance. Forty-seven percent of total search spend was dedicated to mobile ads as consumers increasingly turn to smartphones for local search queries.
“Amazon continues to impact and shape advertising trends and this quarter is no exception,” said Wes MacLaggan, SVP of Marketing for Marin. “Our customer base reached a new quarterly high in eCommerce ad spend, due in part to a record-breaking Prime Day and a strong back to school season.”
Other findings on ecommerce ad spend in Marin’s report, based on data from advertisers active on its platform for the past five quarters, include:
- In total, retailers spent 40% of their budgets on shopping ads, and the number of clicks on shopping ads increased 14%
- Search click volume grew 14% percent, with a big jump in ad clicks for healthcare (85%)
- Boding well for advertisers, cost per click (CPC) continued to decline, dropping to $0.66 in Q3 from $0.72 in Q2. The lowest CPC overall was for retail at $0.35, a 20% decrease from $0.44
- Click-through rates, which had dipped from 3.27% in 2018, are rising again, from 2.91% in both Q1 and Q2 to 2.99% in Q3
MacLaggan said advertising is a big growth opportunity for Amazon. “Every brand of retailer has to have an Amazon strategy,” he said. “It’s obviously a great channel and where people go when they’re searching for a product.”
There’s a cost for retailers of not being on Amazon, MacLaggan said, explaining that a competitor can bid on search for a retailer’s brand and show up in search results if the retailer hasn’t claimed the space.
Marin said Amazon isn’t pulling significant digital dollars away from other platforms. “While Amazon is growing rapidly, they are growing the digital pie rather than stealing from Google and Facebook,” MacLaggan said. Instead the increasing budgets for Amazon spends are coming more from shopper marketing.
The report found CPC for sponsored brands was 27% higher than for sponsored products, which MacLaggan put in context. “It’s really just about the inventory that’s available,” he said. “A sponsored brand is on top of each page and there’s higher demand for premium product placement there, so there’s just more inventory available for sponsored products.”
The 27% premium “seems like a bargain to me,” MacLaggan said, explaining that ecommerce retailers can put their own headlines in a sponsored brand placement, direct traffic to a store experience, display three products, not just one, and not have to deal with any competitor ads in the store experiences.
Amazon’s relationship to the larger ecommerce ecosystem is where retailers can drive performance by optimizing campaigns for each unique platform while connecting the dots across channels, MacLaggan said. He noted the ability through sub links to have conversions happen on the retailer’s website or on Amazon, and the coming ability to track if spend on Google and Facebook ads resulted in an Amazon conversion.