$386.1 Billion. That was the entire net sales revenue for Amazon in 2020, a 37 percent increase from 2019. The only thing more remarkable? $21 Billion came from Amazon’s advertising division alone. That amount actually represents a larger growth than Amazon’s cloud or retail divisions.
It’s not all that surprising. Since its emergence in 2012, Amazon Advertising has grown from a simple platform providing banner ads and search highlight results into a versatile solution sellers can use to maximize visibility and drive conversions. But it’s a constantly changing entity so nuanced that both sellers and vendors are frequently unaware of just how agile a platform it can be.
Amazon has changed the face of retail commerce since its inception in 1994; and subsequently, the face of advertising. But eCommerce is never a stagnant entity. Neither is Amazon Advertising. New developments occur at an astonishing pace, with many sellers becoming so focused on segmentation and compartmentalization that they lose sight of the larger picture. 2021 is bound to bring new changes to the platform—changes as effective as they are overwhelming. But there’s a broader view to consider with Amazon Advertising in 2021.
Both eCommerce and Amazon’s Growth Will Be Unstoppable
Name a single segment of the private sector that hasn’t been affected by the rise of Amazon. Distribution. Commercial real estate. Air transport. Whether exploring new territory or simply impacting existing ones, Amazon’s reach can seem downright staggering when you stop to consider the immensity of it.
It’s the same for eCommerce as a whole. While traditional brick and mortar retailers may have been affected by the 44 percent growth in digital commerce in 2020, they’re not necessarily dead. But their business models have changed drastically. The public demand for solutions including BOPIS and hyperlocal marketing will result in the need for a frictionless omnichannel experience. But will Amazon be able to meet the demand?
Think of Amazon as a prism reflecting the larger spectrum of retail as a whole. If the demand for a more personalized customer experience is a broad and diverse spectrum, Amazon will have to provide a more precise and concentrated array of solutions to meet it. And it’s no different for the branding experience, either. Amazon is fully aware that brands will demand a seamless transition from traditional to digital marketing. The underlying psychology is the same. It’s just the technology that’s different.
Advertising Strategies Must Align With Brand Narratives
As digital commerce continues to accelerate to what some estimates have predicted to be $3.9 Trillion in 2021, a more sophisticated and agile approach to advertising will prove critical. Amazon Advertising may provide an incredibly robust digital marketing platform, but a dilemma many brands face is choosing a solution which is aligned with their greater brand narrative.
It can seem overwhelming. Video advertising. Sponsored Display. A+ Content. DSP. The sheer magnitude of Amazon solutions available for sellers can not only equal those of traditional advertising, but prove much more diverse and nuanced. But not every solution is appropriate for every brand. Many smaller brands feel intimidated by paid advertising, instead choosing to boost Amazon traffic through social media when initiating their campaigns. Prior to 2020, it was (and still is) an effective approach. But small business is a commanding force on Amazon. And it’s only going to continue to be in the months ahead.
Recent data from independent consulting firm Analytic Partners estimates that paid advertising can bring in a 20 percent higher ROI on Amazon, with up to 90 percent of paid display advertising impacting non Amazon sales. But for both sellers and smaller vendors alike, paid display advertising isn’t always cost effective—particularly if it’s not suited to their brand message. One potential solution is for brands to dip their toes into the pool slowly by leveraging relatively low cost solutions such as PPC. PPC generally tends to be much easier to track and analyze, giving businesses direct insight into their ROI which is precise, measurable and easily quantifiable.
Brand Identity and the Amazon Experience
If brands hope to survive in an increasingly crowded marketplace, they don’t just need to adapt to the demands of digital commerce. Just like offline brands, they need to distinguish themselves first. Luckily, there’s a plethora of solutions from Amazon Advertising which can help craft a unique brand identity and make a distinct connection with their audience base.
Stores on Amazon allows brands the opportunity to highlight their brand story by curating internal content which best reflects the arc of their brand’s history, while Amazon Posts (currently in beta mode) promises to drive product discovery through curated lifestyle imagery in a shoppable feed available on product detail pages and both product and category-based feeds. And while video ads will still remain a steady driver on Amazon, newer developments like OTT and Sizmek Ad Suite can help drive traffic from customers off Marketplace—ensuring customized performance and maximum visibility.
The impact Amazon has had on retail in just twelve months can’t be underestimated. But it’s the impact on creativity and product development that will continue to drive Amazon into new territories in 2021 and beyond. Just like brand identity itself, Amazon Advertising is never stagnant. It adapts to new habits, new demands and new outlooks. So should your brand.
Color More Lines helps you drive more sales and maximize your advertising spending with proven and experienced marketing expertise on Amazon and beyond. We provide white glove, global account management of your ecommerce platform so mission driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.