Advertisers are spending more on Amazon to reach online shoppers, despite a modest decrease in return on ad-spending (ROAS). In addition, there was little change in ad efficiency metrics such as CPA and CPC.
Pacvue has release its 2021 Q1 CPC Report showcasing insights and growth around Amazon Advertising. The report found that Sponsored Product spending increased by 41% and Sponsored Brand spending increased by 89% year-over-year. This represent a 59% increase in average daily spend year-over-year in Q1 on Amazon.
Pacvue is an enterprise platform for brands, sellers, and agencies to manage online retail advertising. Pacvue’s 2021 Q1 CPC Report reveals how a variety of advertising metrics have performed through the first quarter of 2021. The report shows that eCommerce advertising is continuing to gain traction as brands look to reach consumers through sponsored brand and product spending. There are some signs of a “return to normal” as digital ROAS Q1 showed a modest decline during Q1.
“The data insights shows that online shopping has become more normalised than ever before,” said Melissa Burdick, president of Pacvue. “Both sponsored product and sponsored brand ad spend increased by 5-10% each month so far this year. With digital ROAS performing roughly the same as it was in Q1 2020, the growth in ad quantity reflects advertisers adjusting their budgets to account for the dramatic increase in eCommerce traffic on Amazon. As more consumers shop online throughout 2021, we will see an even higher spend in these categories following that trend.”
Key 2021 Q1 CPC Report findings:
- Advertisers are increasingly spending on Amazon Advertising. Sponsored product spending increased by 41% and sponsored brand spending increased by 89% year-over-year. Combined, this represents a 59% increase in average daily spend year-over-year in Q1.
- ROAS saw a modest decline in Q1 2021, with sponsored product ROAS down 8% quarter-over-quarter and 6% year-over-year. Sponsored brand ROAS was down 7% quarter-over-quarter and 12% year-over-year.
- Despite increased brand spend, efficiency costs, including CPC and CPA, were little changed in Q1. Neither moved more than 10% quarter-over-quarter or year-over-year. Advertisers aren’t increasing their average daily brand spend in response to higher conversion costs. Instead they responding to the increased volume of eCommerce traffic.
- The sports & outdoors category saw a dramatic increase in conversion rate throughout Q1, reaching 12.23% in March. This could possibly indicate that consumers are eager for nicer weather after the pandemic winter. Similarly, the patio, lawn & garden category saw increased competitiveness. Daily spend went up 48% month-over-month from February to March and CPCs up 18%.
- If anything signifies back to normal, it’s this: “valentines day gifts for him” and “valentines day gifts for her.” These items returned as the top two search queries in February 2021. This is after no Valentine’s-related terms appeared in the top ten in February 2020.
Supporting Amazon DSP
The report insights are sourced from Pacvue’s proprietary Amazon keyword tracking database. This includes data from hundreds of advertisers across small, mid-sized, and large brands and every major product category.
Last month, Pacvue launched programmatic support for Amazon DSP, allowing advertisers to manage their Amazon DSP campaigns directly in Pacvue. It takes advantage of the intelligent automation features, bid optimisation, and robust reporting tools that brands and agencies alike have come to depend on from Pacvue. By combining holistic performance insights in a single experience and surfacing recommended actions, advertisers can save time managing campaigns. This enables companies to build a robust strategy to meet their unique business objectives.
Enterprise Times: What this means for business?
Programmatic marketing, the use of software to buy digital advertising is expected to grow phenomenally over the next few years, particularly as online shopping becomes the new normal for most consumers. This should put platforms and providers such as Pacvue in a pole position in the digital marketing race. Pacvue enables campaign management for Amazon Demand Side Platform (DSP). The company has a vision of providing a holistic solution for advertising, marketing automation, and retail intelligence. The idea is to help brands grow online. Amazon DSP complements the Amazon Advertising offerings that Pacvue already supports, as well as additional retail channels, including Walmart, Instacart, Target, and eBay.