Where Amazon PPC Fits in the Consumer Buying Lifecycle

PPC, Retargeting or Social Media Advertising are only a few options your brand can use to reach customers. With numerous targeting and creative possibilities specific to each one of these channels, many brands are indecisive or confused about what should be their choice. Understanding the Customer Buying Lifecycle and deciding the “where, when, and how” behind effectively targeting customers are essential to creating a clear path towards purchasing.

Looking at customer behaviour, we can see that platforms such as Facebook and Google represent the leading advertising channels as customers rely on them to discover new products, conduct research, see what friends and online influencers are up to, and generally hang out. In fact, according to eMarketer, Google and Facebook together will share 63.1% of US digital ad investment in 2017.

It makes sense that these platforms are generally targeted by advertisers as they allow them to drive awareness or increase sales for their brands. But are these your only options? 

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There is another platform that has been quickly gaining momentum in the paid search world, and if you guessed Amazon, you are right. Even though it’s current share of the $48.42BN display advertising market is only 3%, we are expecting growth. According to Atlantic Equities, more brands will adopt the platform by 2020, generating four times more advertising revenue for Amazon.

Once Amazon establishes the technology and audience for PPC, digital advertising becomes a very profitable and scalable service offering. While things are just heating up with Amazon PPC, the online retail mogul has significant motivations to grow their advertising platform quickly due to two key benefits:
 

  1. A high-margin revenue stream
  2. A way to help brands drive even more sales in their marketplace.  
     

As a third challenger to the existing duopoly of paid search, Amazon is creating more competition - and ultimately - creating even more options for brands when it comes to reaching new customers and driving sales. 

In the war for advertising dollars, consumer brands must know where to spend their hard-earned budgets, which isn’t always an easy task. Here we’ll break it down - showing you how to find the best place for your PPC investment in the upcoming year.


An Over-abundance of Choice

Everyone knows that the whole point of paid search and advertising is to create awareness, drum up demand, and drive sales. In the performance marketing world, the path to purchase should be trackable - with a defined value for each step in the purchase journey. 

The key metrics for any performance marketer is Return On Ad Spend, which demonstrates that ad budget has been spent effectively. But given the fragmented nature of the real life consumer purchase journey - where a consumer may learn about a product through social media, research it on google, and later buy it on Amazon - the abundance of placement and targeting options makes it difficult to know how to allocate ad spend. 

This results in confusion when trying to determine if you ad budget is being spent effectively across all the touchpoints throughout this extensive customer journey.  

Coupled with this fragmented purchase cycle is the fact that many brands are finding the costs of digital advertising increasing. As players like Facebook and Google reach dominance and become more competitive, the Cost Per Click (CPC) of campaigns generally rises. 

Many advertisers welcome a third challenger like Amazon to create more competition - forcing continued innovation and driving prices down. 

Already retail marketers are adopting Amazon’s advertising platform in droves: According to Internet Retailer’s 2017 Digital Marketing Survey, 27.6% of retail marketers currently advertise on Amazon.

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Advertisers need to understand how Amazon fits into the existing advertising ecosystem and buying journey, so they can get more bang for their buck out of paid search campaigns.

 

Is there a perfect choice for your brand?

In reality, no single channel is a panacea for reaching and converting consumers since Google, Facebook, and Amazon each have their inherent strengths and weaknesses. Much of these come down to how consumers interact with their core platform, and where they’re at in the consumer purchase journey.

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Each channel attacks a different segment of the consumer purchase journey, so budgets should depend on the nature of the product and existing awareness of the brand.  

 

The Discovery Stage - Facebook Advertising

If your customers aren’t yet aware of a brand or product, Facebook is your ideal channel, as with these audiences, the ultimate goal is to provide social proof.

“Facebook’s biggest greatest strength, compared to other channels, is it's reach and targeting for the Discovery portion of the consumer purchase lifecycle” says Kevin Simonson, Co-founder of performance marketing agency Metric Digital

Brands can build awareness with prospecting ads and build familiarity with retargeting ads. Facebook can also be used to grow loyalty at the very bottom of the funnel by promoting user generated content. 

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Simonson says that the top three benefits of advertising on Facebook are far reach, quality targeting, and low cost. Let’s take a closer look at those benefits:
 

1. Far Reach

Facebook has over 2 billion monthly active users, so its ability to reach almost any individual person or interest group is unparallelled. Facebook’s acquisition of Instagram further expands the potential reach to users who are more active on that platform, effectively expanding a brand’s reach even further.
 

2. Quality Targeting

Facebook can provide targeting based upon consumer interests, demographics, and a myriad of other options. 
For example, a nutritional supplement company can choose to display ads to users with an established interest in gyms, nutrition and bodybuilding. They could also limit the targeting to users in the specific geographical areas where the brand’s products are sold.

Advertisers can also choose where their ads display - on Facebook’s web pages, mobile app, Instagram, or display network. With Facebook, brands can easily retarget past customers and visitors to their online store, meaning they pay for performance based on the desired outcome of the campaign.

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3. Low cost

Some advertisers would argue that Facebook has become increasingly expensive over the past couple of years as competition has increased. But since Facebook offers such rich targeting options and can track conversions across multiple devices, it still offers a compelling, measurable return on ad spend.  

 

LIMITATIONS

As for limitations with Facebook, Simonson agrees that competition on Facebook is high. “It's certainly noisy so brands and agencies need to be creative to break through”. 

According to eMarketer, in 2017, Facebook will capture more than one in five US digital ad dollars. 

That’s a lot of other brands competing for user attention. To stand out in a user’s newsfeed, advertisers need to be smart about their creative and targeting.  

The other key drawback to Facebook is that since people don’t tend to make purchases directly on the social media platform, tracking and assigning a value to the purchase path can be troublesome. 

This is especially the case if the purchase ultimately happens on a platform like Amazon - which is increasingly likely given that more than half of product searches now begin on Amazon.
 

The Research Stage - Google Advertising

If your customers are actively searching either for your brand or product or a solution to their needs, then Google is your best bet.

According to John Pellinghelli, Co-founder of Metric Digital and Google advertising expert, Google’s Search, Shopping and Remarketing capabilities allow it to be the most effective at the mid to lower part of the funnel.

Each of these tactics have their own pros and cons when it comes to reaching and converting consumers. 

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1. Paid Search (Adwords) 

This platform has been around for a long time, so there’s an established methodology that offers transparent and reliable reporting, as well as an abundance of historical data. 

“You're reaching hand raisers who are actively seeking information about your product” says Pellinghelli. “However, there is less opportunity to differentiate due to character limits, and this ad type is all text”. 

Adwords can also get expensive as advertisers battle over the scarce space available for competitive keywords.  

2. Remarketing

Google provides rich capabilities around retargeting past customers and visitors to a brand’s website. Advertisers can retarget users simply by focusing on products or other creative ad types based on the design resources available. 

However, control may be an issue since Google’s Display Network is very extensive. There is the ability to blacklist and whitelist specific sites, but this must be done manually. This is how some brands have come under fire for inadvertently advertising on polarizing political websites like Breitbart.

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3. Google Shopping

This ad type has a lot of potential to generate fast results. 

“It's a visual platform that's simultaneously extremely purchase oriented,” says Pellinghelli. “The shopper sees prices up-front, and advertisers only pay for clicks, so this helps cut down unqualified clicks & wasted spend.”

The limitations with Google Shopping is that it’s limited to users actually searching for those products in the defined geographical market. If that’s not the case, and your consumer did not get through the awareness stage, it will be difficult to target them with this ad type.


The Buying Stage - Amazon Advertising

If your customer is ready to make a purchase then it means we are sliding down into the buying stage - AND - it’s where over half of product searches begin.

Stefan Jordev, PPC Manager at Bobsled Marketing, explains that “Advertisers on Google and other paid search platforms might be aiming to aid a user’s search for information or knowledge, sign up for a program, or buy a product. But on Amazon, all ads are focused on having the customer click on an ad placement, then click the ‘add to cart’ button.” 

This means that Amazon’s advertising potential is placed half-way through the consumer purchase journey, where shoppers are not only taking into considerations their options, but they are actually performing the transaction.

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Although brands are finding Amazon to be increasingly effective for generating sales, like any other advertising platform, it has its own inherent strengths and weaknesses.

1. Competitive ROAS

In comparison to other advertising channels, Amazon can offer you the chance to convert customers at a lower cost. Steve Wimmer is the Senior Marketing Manager at automotive care manufacturer Gold Eagle Company. He confirms, “we’ve achieved a substantial ROI on our ad spend, helping our growth on the platform to accelerate. Our best case scenario with adwords was break-even, and our average return on amazon is 5-1.”


2. A Faster Route to Purchase

It’s not a coincidence that Amazon is such a popular starting point for product searches. In fact half of the customers prefer it, as Amazon is a few clicks away from over 500 million products, making it almost impossible not to find what you need. People also trust Amazon to deliver their purchase quickly and offer hassle-free returns. 

Amazon’s website is a beacon for conversion rate optimization - few ecommerce websites can hold a candle to Amazon’s ability to make a sale. This means that with the right keyword targeting and bidding strategy, users can find your product and make their purchase fairly quickly. 

 

3. Integration with Fulfillment

Amazon is both the advertising platform and the fulfillment platform. This means that there’s no missed links between devices or platforms. It streamlines the transition between a user searching for a product, clicking on an ad, and making a purchase. It’s all happening on the same platform, which makes attribution very straightforward and easy to prove.   

Of course there are drawbacks with Amazon’s existing advertising capabilities, and a lot of these come down to the overall maturity of the platform. 

Google and Facebook have been improving and developing their platforms for years, but we need to consider that Amazon is fairly new on the scene. There are limited ad types (currently just three - Sponsored Products, Headline Search, and Product Display Ads), and reporting functionality is limited. 

For example, there’s no ability to customize reports with custom dates. 
“The limited lookback period is one of the more frustrating elements of this new-ish ad platform,” Jordev says. “Not being able to review data for exact dates can be annoying when you’re trying to track the effects of a specific promotion.” 

  Above: the three key Amazon PPC campaign types.

Above: the three key Amazon PPC campaign types.

It’s well known that Amazon is reserved when it comes to sharing customer data with brands or advertisers, even though this would improve the current advertising alternatives. Even if at the moment there is no option when it comes to retargeting, leveraging consumer purchase data would enable Amazon to provide a strong targeting capability. 

While this channel is continually improving its reporting and targeting capabilities, some limitations will probably persist due to the nature of the platform. For example, it can take up to 72 hours for ad sales data to accumulate and provide accurate conversion information. “We’ve sometimes seen sales attributed even after 72 hours,” Jordev says. “That’s just how Amazon works - a buyer could click your ad, put an item in their cart and actually only go through the checkout process out a week later.”

Given a huge increase in revenue from its advertising products, Amazon will continue to invest to attract more advertisers and make it easier and more compelling to spend their ad budget there with better reporting, more tools, more ad types, advanced targeting, etc. 

For now, brands need to work with what’s available and manage some manual processes to get the targeting and reporting they need. 

At the same time, brands should take advantage of the low cost and limited competition on the platform. This also gives them time to build up the rich historical data in their campaigns to help them perform better with time. 
 

What is the best option for your brand?
Full-funnel Product Advertising Works Best

Advertisers and brands have welcomed Amazon into the world of digital advertising platforms. The entrance of a new competitor is likely to drive CPCs down and continue the path of innovation, but it’s important to understand that each platform has its own inherent strengths and weaknesses. 

Ultimately, product advertisers shouldn’t choose a single platform in isolation. 

Each channel occupies a specific space in the consumer purchase funnel, so they can each be used effectively by brands depending on the need at the time. 

So how do you choose which platform is right for your business, right now?
That depends on where your customers are currently at in their purchase journey:

 

  • There is no doubt that Facebook’s network is unmatched when it comes to raising awareness for a brand, as its demographic-based targeting and deep interest enables brands to connect with their ideal customers. 
  • With an extensive publishing network and analytics features, Google can help you address customers in the awareness stage, driving them further towards a purchase.
  • And Amazon is where people go to comparison shop and complete their purchase. There will be increased competition for spend amongst these competitors, but the overall market will also be growing in coming years as even more marketing budget shifts online. Brands will be the beneficiaries here, since advertising platforms will continue to invest in innovations that attract ad dollars.  

 

Brands, and the advertisers who represent them, need to map out how their existing advertising campaigns fall into the consumer purchase lifecycle. 

By focusing solely on Amazon Sponsored Products, brands will lose potential upside from building awareness and consideration with new audiences. And without PPC running at the ‘pointy’ end of the lifecycle, brands are missing out on converting shoppers who know what they’re looking for (or allowing a savvy competitor to swoop in).


Now is the time to enact a full-funnel PPC strategy

The performance of campaigns across all of these channels generally improves with time and historical data. Performance data can be leveraged across platforms, with transactional campaign data feeding into awareness marketing campaigns and vice versa. 

By considering the full funnel of paid search marketing, brands can effectively leverage the strengths of each platform and minimize the downside. 

Need help in planning and executing your Amazon PPC strategy? Bobsled Marketing can help. Read about our Amazon PPC Services and see how we work with brands to increase their sales and reach on the platform.