Television and Digital Advertising’s Impact on Amazon Sales: What Every Marketer Needs to Know
One of the great advantages of television and digital advertising is the marketer’s ability to measure the cause and effect of an ad as it relates to online sales. TV ads commonly feature URLs to let prospects know where to find the item being featured and digital ads offer links that transport prospects directly to the landing page of a marketer’s choice. Marketers will then measure such key performance indicators (KPIs) as visitor traffic to the website and sales conversions that can be tied back to a specific advertising event using various methods of attribution. Too often, however, these same marketers will overlook the impact that such advertising has on their Amazon sales, which, as the reader will soon discover, is most definitely not an optimal practice, given the degree to which the online retailer dominates e-commerce.
To fully comprehend the formidable connection between such advertising and its impact on Amazon, it helps to begin with television and the behaviors that consumers are engaged in that enable a marketer to draw a line between their TV commercials and Amazon. According to the Nielsen Total Audience Report: Q2 2018, 45% of surveyed adults “very often: or “always” use a digital device such as a smartphone or tablet while watching TV; in fact, only 12 percent of consumers indicated they “never” use such devices during their television viewing. All one needs to do is look around their own TV viewing room to understand that very often family members (not to mention we ourselves) are watching television with a so-called second screen in our hand or nearby. But what exactly are we doing with those devices? According to the same Nielsen report, 71% surveyed indicated they “look up information related to the content” while 35% indicated they “look up/shop for a product/service being advertised.”
This later assertion is validated by the simple fact that whenever a television ad runs, we commonly see an incremental lift in website traffic that varies from 10 to as much as 350% over a steady baseline of traffic that occurs during a non-advertising event. But it isn’t just an increase in traffic to an advertiser’s website that experiences incremental lift. According to a 2018 survey conducted by AdeptMind, nearly 47% of U.S. consumers go to Amazon first to research products; far more than Google’s 34.6%. With U.S. household Amazon Prime membership forecasted to reach 51.3% by the end of the year (68.7 million homes) according to eMarketer, it makes perfect sense that prospects would beeline to the ecommerce giant. Consumers whose curiosity has been piqued by something they’ve seen advertised on TV know they can go to Amazon to easily access average star ratings, read reviews, and shop competitive prices. Furthermore, Prime members are confident they can rely on fast shipping and liberal return policies. This combination of social proof, the familiarity with where to find information on a given Amazon page, and the enduring trust the e-tailer has built with its customers, explains in part why Amazon’s domestic ecommerce sales equate to nearly half of all U.S.-based online sales. That’s right: according to eMarketer, Amazon’s 49.1% share of the total ecommerce that occurs in America dwarfs all other competitors. That includes the percentage of market share of all the other nine that comprise the top ten combined, including eBay, Apple, Wal-Mart, The Home Depot, Best Buy, Qurate Retail Group (QVC/HSN/zulily), Macy’s, Costco, and Wayfair!
So, yes, it’s no stretch to assume that there’s a direct connection between TV advertising and a steady stream of prospective buyers making their way to Amazon.com. So much so, that we have managed several campaigns where, for every unit sold on their own website, direct marketers will sell as many as 2 to 25 additional units on Amazon. These are advertising efforts that are as close to “pure plays” as you can imagine, meaning—there is no other form of advertising or promotion of any real consequence driving awareness, making the surety of this TV-Amazon connection a foregone conclusion. According to Grillbot inventor and CEO Ethan Woods, “TV advertising provides the greatest reach and is the fastest way for us to create brand awareness and increase sales across all of our channels of distribution.”
A similar corollary can be found with digital advertising. Despite the fact consumers can click through directly to a marketer’s site, because of the same combination of intimacy and trust referenced above, prospects will often turn to Amazon. So, for example, a consumer might see an ad on Facebook or Instagram and click through to the marketer’s site, but then move on to Amazon to substantiate the claims being made, check out reviews, and compare prices. All things being equal then, those shoppers will often choose to buy the item on Amazon given the convenience of one-click shopping and speedy delivery. In this instance, the number of sales being realized is typically not as exponential as the TV sales described above because the online ads simply do not have the audience reach of TV. However, for every product sold on an advertiser’s website often you will see one to five additional sales on Amazon, a further testament to the dominate online retailer’s might.
What then are the critical lessons for marketers?
- A marketer must be on Amazon. In the past some marketers would forego the Amazon channel so they could foster direct customer relationships, protect margins, and avoid the unique arena of competition that it represents. But the simple truth is, Amazon has become too significant a marketplace to ignore and its market share is trending in one direction: up. Besides, if you’re not present on Amazon, your competition will be served up to your prospects on a silver platter.
- A marketer must control their Amazon channel, avoiding or eliminating third-part sellers to protect messaging and the manufacturer’s suggested retail price. Otherwise, they risk ceding margin to other sellers or confusing the marketplace with too many choices they may cause them to turn away.
- A marketer must be savvy and proactive about building and managing their Amazon presence, including messaging, written and video content, reviews (both positive and negative), and average star rating, as well as mitigating any Amazon Marketplace gray market goods that are unauthorized and being sold at prices below those intended by the manufacture.
Finally, a direct marketer must count Amazon sales as part of their overall response because it has proven time and time again that there is a direct correlation between when an ad runs, and corresponding Amazon traffic and sales. A media efficiency ration (MER) which measures the sales generated against the cost of media should be calculated carefully using agreed upon business rules. In one instance, sales on a marketer’s website alone generated a MER of .27:1, meaning that for every dollar spent (in this case on TV), it generated a modest 27 cents in sales to their website. However, when the lift in Amazon sales were factored into the calculation, the MER rose to a stunning 5.8:1!
The conclusion: gone are the days when a marketer can look at direct sales in isolation from Amazon. The power of the ecommerce behemoth’s marketplace is simply too massive to be ignored. As Paul Francis, CEO and Chairman of OYO Fitness puts it, “Every savvy marketer knows they must create alignment between their marketing efforts and what it is customers are choosing to do, especially in an age of infinite consumer choice and control. It simply makes good business sense that the manner with which marketers analyze their response data be in alignment with their consumer’s purchasing behavior as well.”
Author: Rick Petry is the CMO/EVP Client Services of DirectAvenue and a seasoned direct marketing professional and thought leader with experience spanning three decades. He has had a hand in campaigns generating over $1 billion in sales and is conversant in all facets of performance-based marketing including off-line and on-line media planning and buying, research, analytics, creative, production, and back-end management, Rick is the author of over 200 articles on direct marketing best practices, and is a past Chairman of the Board of the Electronic Retailing Association (ERA) and a recipient of ERA’s Volunteer of the Year award, as well as the Direct Response Marketing Alliance’ Member of the Year award as voted by his peers.