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"You can't just show up to Amazon today and put up your product content and some brand content and expect anyone to be able to find your product — or to actually build any sort of meaningful momentum on Amazon." — Kiri Masters, Head of Retail Strategy, Acadia
Is Amazon now strictly play-to-play? The answer to that question is likely yes, depending on the category. That’s what Kiri Masters and her team discovered when they studied search results pages on the platform.
Masters, head of retail strategy at Acadia, a top-ranked digital agency that works with challenger brands to grow their sales on online marketplaces, partnered with the ecommerce analytics platform Analytic Index on the study, "In It To Win It."
The study explores how sponsored advertising reshapes page one search results on Amazon, why this matters, and what brands can do to craft a winning digital experience strategy on the platform.
Masters joined a recent episode of the "Unpacking the Digital Shelf" podcast, "Is Amazon Today Pay-to-Play and the Impact on Your Strategy," to share key takeaways from the research, Acadia’s "Sponsorship Lift Matrix," and her practical advice for both upstart and legacy brands.
Amazon now earns $10 billion in quarterly revenue per Marketing Dive, making it the most powerful player in ecommerce.
But as its revenue has grown, the research and shopping experience on Amazon’s page one search results also have shifted.
"You can't just show up to Amazon today and put up your product content and some brand content and expect anyone to be able to find your product — or to actually build any sort of meaningful momentum on Amazon," Masters says.
Amazon has become increasingly crowded and competitive. As a result, more brands are using sponsored placements to stand out amidst the noise.
Acadia and Analytics Index examined more than 600,000 brands across various categories, using modeling to determine from a volume-weighted perspective how paid placements affect organic visibility.
The companies discovered, unsurprisingly, that sponsored placements are a critical part of the customer experience on Amazon, with everything from sponsored products and headline searches to sponsored display ads featured prominently on search results pages.
"When you go onto Amazon.com, which is when you're doing a search for anything really — whether it's toothpaste or a cocktail dress — you're going to see a lot of ads. Some consumers are not even really aware that they're ads," Master says.
Though sponsorships are nearly everywhere on Amazon, some categories lean more heavily on these placements than others.
Analytics Index and Acadia tracked the percentage of real estate on search pages that sponsored placements consumed and found the electronics category had the highest percentage — 21%.
"So, 21% of the page is taken up by sponsored slots, and that doesn't include sort of other gray area placements like editorial placements or Amazon's own brands," Masters says.
Amazon is the primary discovery engine for most consumers, so most brands must invest in the platform.
Masters says Amazon is beneficial for discoverability when a consumer is searching for a specific type of product or brand, but it’s also useful when a consumer is openly exploring.
Whatever the customer’s intention, Amazon has become adept at amassing tons of data to better understand what consumers are interested in. Brands can then use this information to bid on keywords, improve targeting, and drive discovery.
Essentially, Amazon isn’t just a bottom-of-the-funnel-vehicle to meet customers where they are, Masters says; It’s a vehicle to reach highly-curated and specific audience segments who are primed to buy your products.
It’s clear organic search isn’t what it used to be, but that doesn’t mean brands should focus on sponsored placements entirely at the expense of organic placements. There’s a direct relationship between sponsorship and organic visibility, Masters says.
Masters says the beauty and personal care and electronics categories have the highest correlation between sponsored placements and organic lift, with a lift of 64% and 70%, respectively. Grocery, food, and apparel are at the opposite end of the spectrum. Aside from category, this connection is strongest depending on a brand’s maturity.
"Something interesting that we found was some of these brands that have a real legacy — so a Nike or even a Crocs or a Lego or Disney — brands that have invested in brand marketing for a long time outside of Amazon … they can go into this naturally high performers category where they have so much equity and recognition they don't necessarily need to be as active with advertising on Amazon as a brand that is really trying to break through would be," she says.
Acadia and Analytics Index created a "Sponsorship Lift Matrix" to assess how much sponsorship actually drives visibility, discoverability, and sales for brands. They divided brands into four categories:
Masters says, in some cases, brands are over-investing in Amazon and not seeing meaningful results, while more established brands are getting organic search visibility simply based on decades of name recognition alone.
She says it’s important for challenger brands, in particular, to clearly define their goals and vision for their digital experience strategy and then decide how aggressively they want to invest in Amazon.
"Whether a brand is focused on revenue growth or some kind of growth metric, such as market share or category share versus something more profitability-related, such as contribution margin, return on ad spend [ROAS], and those kinds of things, that's really going to dictate how aggressive you might be in taking out those top slots," Masters says.
"Also, what are your competitors doing? You might place really well organically, but you have a super-aggressive competitor who's conquesting your brand term. That might be a position that you want to defend, but you're going to have to be willing to pay for that."
When it comes to playing to win on Amazon, brands will need to determine what sponsorship approach makes the most sense for them.
Masters says most companies can adopt either an always-on approach or a specific-sponsorship approach.
The former involves ongoing sponsored advertising campaigns throughout the year, while the latter focuses on specific activations tied to one-time or seasonal events, like Cyber Monday or Valentine’s Day.
As part of their research, Acadia and Analytics Index compared these two approaches among brands in the hair dryer category around Amazon Prime Day 2022. They found that:
"Long-term gains come from sponsorship and consistent ad spend over time rather than just jumping in and out around sales events." — Kiri Masters, Head of Retail Strategy, Acadia
Though Amazon is now pay-to-play across many categories, brands can meaningfully improve organic performance by strategically integrating sponsored advertising. The trick will be understanding where, when, and how to maximize the value and impact of this spend.
Acadia’s "Sponsorship Lift Matrix" gives brands a better idea of where their advertising investment ranks relative to their peers. For companies wary of continually pumping cash into Amazon, the matrix may provide a blueprint for moving forward, building a successful digital experience strategy, and ultimately paying a little less to play in an Amazon world.
To hear more of Master’s perspective on Amazon, listen to the full episode of "Unpacking the Digital Shelf."
