More and more ecommerce sales are preceded by paid product listings.
The advance of ecommerce advertising in the past year and a half can be seen in the revenue growth in Amazon earnings reports and the promulgation of retail media platforms such as Walmart Connect, Target’s Roundel and Google Shopping.
Marketers, too, are getting used to paying for sponsored listings. Practically every brand that’s sold online is seeing a higher percent of its traffic and ecommerce sales come from paid media, rather than organic listings, said Scott Kennedy, director of ecommerce and digital marketing for the sports equipment brand Franklin Sports.
For the typical web user, the ecommerce advertising trend shows up in the form of sponsored product ads taking over online search and shopping.
In the past three years, Amazon Sponsored Product ads have gone from fewer than 20% of Amazon’s top inventory (the first 10 products shown following any given shopping search) to currently covering more than 40% of average searches, according to data from the Amazon ad agency Momentum Commerce’s Amazon Brand Index tool.
Without paying for placement, it’s become hard for a brand to show up above the fold – before a user scrolls down on their phone or computer – Kennedy said.
“An organically strong brand used to be able to show up atop the page for relevant searches,” Kennedy said. “Now, it’s possible, likely even, that for a competitive search term, the top organic product is way, way below the fold.”
And, unfortunately for online shoppers seeking organic results – and the marketers that need to pay for those placements – sponsored product listings are far from done with their takeover of the web.
Amazon’s competition factory
Amazon more than doubled the average number of sponsored products that show up atop search results, but those rates range from below 20% for some categories, such as frozen food (a tough category for Amazon to warehouse and deliver, so it deprioritizes sponsored listings) to more than 60% for some products, said Momentum Commerce founder and CEO John Shea.
It is unlikely that Amazon’s more competitive categorizes will relax, allowing organic brand listings to reassert themselves, Shea said. Instead, categories with relatively low advertising saturation, even those around the current average of 43% Sponsored Product ads, will grow more competitive with higher rates of paid media to organic listings.
The same dynamic is on display whenever Amazon expands to a new global market or brings Prime shipping to a new country, according to Kennedy. At first, Franklin Sports will see high ROI and organic placement for a spell without many other sellers spending on ads, he said. As more sellers start bidding in that market, ad metrics like cost per click go up. So do the overall rates of Sponsored Product units vs. organic listings.
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