Rising Costs of Amazon Marketing Necessitate Revised Strategies

Amazon.com's record-breaking 2019 Prime Day and holiday season reflect an increasing consumer preference for shopping on the marketplace, as well as a growing opportunity for brands to reach millions of additional shoppers.

The above scenario sounds like third-party seller bliss, but there’s trouble in paradise. As nearly 3 million sellers crowd the marketplace, the costs of marketing on Amazon are increasing.

Sponsored product ads, the highest converting ad type on Amazon, have seen their average cost per click increase 38 percent, while the average conversion rate has dropped by 36 percent. In other words, brands are spending more money to achieve fewer conversions.

To combat rising costs, sellers must use smarter tools and strategies. Those that don’t will see their margins narrow, while those that do will experience growth alongside Amazon.

Over 2019, etailz conducted several tests on best practices for Amazon marketing to combat rising costs. Here are a few of the key findings:

Use Intelligent Automation for Sponsored Products

Despite the rising costs, Sponsored Product Ads remain one of the most cost-effective tools. They increase competitiveness and visibility, drive sales, and lift overall channel performance. In the face of rising costs, the solution is to make Sponsored Products more intelligent.

There are software solutions that can enhance keyword targeting, bid optimizations, daily budget allocation, data storage and reporting. Such software can increase ad profitability to the point that the software pays for itself and more. etailz has seen ad management software increase total sales by 30 percent.

Don’t Skimp on Listing Optimizations

etailz surveyed Amazon shoppers to determine what listing features are most important to them. When asked what two factors matter most in their purchasing decision, shoppers answered price and product reviews.

Credit: etailz, Inc.

When not confined to naming just two factors, consumers ranked every factor highly, indicating that Amazon shoppers evaluate listings holistically.

Credit: etailz, Inc.

We phrased the question from another angle, asking which features, when lacking, dissuade shoppers from buying. Shoppers ranked positive reviews as the most important, closely followed by two-day shipping, quality images and detailed product information.

Credit: etailz, Inc.

As competition on Amazon continues to rise, brands cannot afford to skimp on any section of their listings. Quality images and competitive pricing help drive sales, while detailed product information establishes accurate expectations that, in turn, yields more positive product reviews. It’s a feedback cycle, and every section of the loop must be optimized to maximize performance.

Use Amazon Coupons for High-Performing Product

Coupons are a low-cost, effective means to increase visibility and drive sales. They appear on Amazon’s coupon page, on the search results page, and in the listing. While coupons are accepted as a proven marketing tactic, there are still questions about how to maximize their effectiveness.

In a month-long study, etailz tested which performed better: low-discount coupons on high-performing items or high-discount coupons on slow-moving items. The results were in clear favor of low-discount coupons on high-performing items, driving more than 2.5 times the amount of coupon clips and twice as many redemptions compared to the high-discount coupons on slow-moving items. The low-discount coupons on high-performing items delivered more sales at a better return on investment.

Data Will Decide Which Brands Succeed on Amazon

As Amazon grows, so too does the need for seller sophistication. The brands and sellers with the most data and the best ability to act upon it will rise to the top, while others will struggle to survive in the crowded marketplace.

To learn about more data-backed tips for marketing and brand protection on Amazon, read etailz’s comprehensive report, The State of Amazon Marketing: Increasing Saturation Demands a Proactive Strategy.

Keri Rhodes is marketing director at etailz, Inc., the ultimate online growth platform for brands interested in rapidly scaling business growth on the Amazon, Walmart, eBay marketplaces and beyond.