Spending More for the Same Return – The Increase in Amazon Ads Competition

It’s no surprise that Amazon is the leader in e-commerce sites, causing businesses to flock to the platform in search of increased exposure, shoppers, and sales. This, in turn, has played a dramatic role in the rise of Amazon’s advertising platform. Once upon a time, it was enough for a brand to succeed on Amazon with a well-designed product page and minimal advertising. Those days are long gone, and now, we’re seeing increased competition, leading to higher cost per clicks (CPCs) for advertisers. 

The Factors Contributing to Increased Amazon Ads Competition

  1. Visibility on the Amazon Platform – Amazon has become the preferred shopping site for millions of consumers. With that, brands that sell and advertise on Amazon can be discovered by Amazon shoppers easily and quickly. This has drawn many similar products to the platform, leading to saturated search result pages.
  2. Ease of Selling on Amazon – Amazon makes it incredibly easy for businesses to sell their products on the platform. You do not have to have a website, a warehouse, or even a staff. Getting started is simple and often leads to brands expecting immediate results. 
  3. User-Friendly Amazon Ads Interface – The ease of access to Amazon Ads and its user-friendly interface have made creating and launching ads accessible to many. Amazon provides introductory instruction on the ads and guides those who are brand new through the process. This results in many experienced and inexperienced advertisers competing for the same ad placements.
  4. Effective Ad Targeting Capabilities – The growing awareness about the effectiveness of targeted advertising has led businesses to flock to Amazon, aiming to leverage its powerful ad targeting capabilities. In order to leverage this targeting, advertisers are competing on CPCs in most cases.

With the influx of new advertisers every day, the Amazon Ads platform has become increasingly competitive, driving up the cost of advertising. This has been seen particularly with Sponsored Product campaigns, as these are Amazon’s flagship campaign type and the fastest and simplest to create.

This is causing brands to develop more sophisticated campaigns and creative assets to stand out and compete, in addition to increasing advertising spend distribution across more campaign types than just Sponsored Products. This includes utilizing ads off of Amazon and other platforms, such as social, that drive traffic to Amazon product pages. 

So how does a brand compete in an advertising environment where costs keep rising? Brands must begin to think and operate outside the box. While the temptation to turn to the vast ‘Amazon Help’ ecosystem out there, reading the same books, listening to the same podcasts, and watching the same webinars as everyone else will not help marketers surpass their competition. This is especially true if that competition has had a longer and more successful history on Amazon. 

What we see continue to work and resonate with the Amazon shopper is investing in the brand’s organic content. Images, videos, and product descriptions go a long way in converting shoppers. If you’re going to be investing more in ads because of the increased competition, you better be sure that your product detail pages make a return on that investment. We can bid all we want on a search term or ad placement, but if the product pages do not resonate with the Amazon shopper, that is a lost investment. Read our previous blog post, 6 Steps to Optimize Your Amazon Ad Campaigns for Maximum ROI.

Additionally, using all of Amazon’s organic tools, like Posts, Brand Storefronts, Consumer Engagement Programs, and A+ Content, etc., to enhance your brand and product appearance on Amazon leads to higher sales, higher ad conversion, and better search ranking on Amazon.

Finally, businesses must focus on customer satisfaction and retention. Investing to get an Amazon shopper to your brand is expensive, but once they love your brand and products, they will return. So investing in that retention is critical. Some of the ways that brands can ensure this returned purchase behavior is by providing exceptional customer service and utilizing the Subscribe & Save program, email communication through Buy/Seller messages, or the Customer Engagement program.  

While the challenges are real, brands armed with consumer insights, creativity, and strategic usage of ads and organic promotion tools can perform well amidst the competition. By understanding the brand’s target consumer, optimizing product listings, and creating strategic ads, businesses can navigate the Amazon marketplace successfully while challenging the rise of their competitors.

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