Amazon Ad Spending Enjoys Strong Growth Again in Q1

April 30, 2018

This article is included in these additional categories:

Advertising Trends | Creative & Formats | Digital | Industries | Paid Search | Retail & E-Commerce | Spending & Spenders

The median advertiser spent almost twice as much on Amazon Sponsored Product Ads (+96%) and Headline Search Ads (+90%) in Q1 2018 as they did a year earlier, reports Merkle in its Q1 2018 Digital Marketing Report [download page]. Spending growth accelerated in Q1 as compared to previous quarters, although the way that spending was allocated against ad types remained broadly similar.

For the quarter advertisers spent 86% of their Amazon search ad spend on Sponsored Product ads, up from 85% in Q4 2017 and 82% in Q3. About 1 in 10 Amazon ad dollars went to Headline Search Ads, consistent with previous quarters, and 4% to Product Display Ads, which haven’t proven to perform quite as well.

Growing competition for Headline Search Ads led to a large rise in costs per click (+128%), which contributed to the increased spend. Costs per click also rose significantly for Sponsored Product Ads, up by 65% year-over-year.

Click-through-rates (CTRs) continue to be far higher for Headline Search Ads (HSAs) than for other ad types. In fact, HSAs sported an average CTR that was 3-and-a-half times higher than Sponsored Product Ads, which Merkle attributes to “the prime placement of Headline Search Ads at the very top of results, as well as the presence of only a single HSA impression per search results page.”

Product Display Ads actually had an average click-through rate for the median advertiser that was close to being on par with Sponsored Product Ads – just 10% lower.

But Product Display Ads aren’t returning the same sales for those clicks. Indeed, sales per click were 71% lower for Product Display Ads than they were for Sponsored Product Ads. By comparison, they were just 16% lower for Headline Search Ads than for Sponsored Product Ads. The reason for this, Merkle notes, is that Sponsored Product Ads and Headline Search Ads use keywords selected by advertisers for targeting purposes, whereas Product Display Ads are targeted by other metrics (such as product ASIN, subcategory, or behaviorally-based interest categories).

A forecast released last year by eMarketer called for Amazon’s US ad revenues to double in the next couple of years.

In recognition of the enormous influence Amazon is exerting in the retail marketplace, MarketingCharts, in partnership with Hitwise, a division of Connexity, is publishing the top weekly search terms and product pages on Amazon. This data is only available to newsletter subscribers (each Wednesday and Friday): please sign up here.

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