As brands and retailers scramble to respond to the rapidly changing business environment, Tinuiti’s Amazon Ads Benchmark Report for Q1 2020, due to be released this Tuesday, examines key trends in Amazon Advertising, explores the impact of COVID-19, and offers data-driven insights for brands, Amazon sellers, and the broader retail industry.
“The biggest lesson from Q1 and the early weeks of Q2 is that conditions can and do change rapidly, as evidenced by the rapid rise of sales attributed to Sponsored Products in mid-April shortly after stimulus deposits [from US government]. Brands must be ready to meet the demands of consumers as they evolve over time. This is especially true of advertising on a platform like Amazon, which plays a crucial role in ecommerce at a time when more consumers than ever before are turning to online outlets for the products they want and need.”
– Andy Taylor, director of research, Tinuiti
Across a collection of more than 150 long-standing Amazon advertisers that remained active throughout April, sales attributed to Amazon Advertising’s Sponsored Products on April 15 spiked 41% compared to the daily average of the first two weeks of the month, with more than half of the clients studied seeing a jump of at least 20%. Sales remained elevated on April 16, coming in at 33% higher than the daily average of the first two weeks of April.
Highlights from Tinuiti’s Amazon Advertising Benchmark Report
- Amazon DSP advertisers increased spend 4% quarter over quarter, despite the fact that Q1 is often a slower time for many advertisers than the busy Q4 holiday shopping season. CPM declined meaningfully, going from down 11% quarter over quarter in Q4 to down 26% in Q1 2020.
- DSP advertisers held spend roughly steady through the month of March as the Coronavirus began to have more of an effect on everyday life in the US. CPM declined from February to March, as the exit of some advertisers decreased the level of competition.
- The share of DSP ad spend attributed to campaigns focused on building awareness and consideration grew from 26% last Q1 to 43% in Q1 2020, as advertisers have steadily leaned into the branding potential of these ad units. Purchase-focused campaigns did account for 57% of spend in Q1, growing from 40% in Q4 2019.
Amazon Sponsored Products & Sponsored Brands
- Amazon Sponsored Products spend grew 24% year over year in Q1 2020, a modest deceleration from the 30% observed in Q4 2019, as sales driven by the format grew 19%. Clicks grew 14% in Q1, and CPC growth decelerated for the first time in three quarters, going from 12% in Q4 to 9% in Q1.
- Sponsored Brands spend grew a staggering 47% year over year for the quarter, representing a significant rebound from the 27% spend growth seen in Q4 2019. Sales attributed to the format grew even faster at 57%
- Amazon shoppers converted more quickly in mid-March as ordinances to maintain social distancing and brick-and-mortar closures started to take effect, and between March 11 and March 21, 87% of Sponsored Products conversions occurred within 24 hours of ad clicks, compared to 84% between January 1 and March 10. The time between ad click and conversion returned to normal over the last week and a half of the quarter.
- Ad impressions declined more than 30% year over year the last week of the quarter, and the evidence suggests Amazon made sweeping changes to Sponsored Products ad placements. The missing impressions appear to have come entirely from search results placements outside of those at the top of the page and did not meaningfully affect click growth as the placements they were pulled from garnered a very low CTR.