Last year for the first time data for the US indicated that ad spend on digital surpassed that on TV.
There are many reasons for this (such as the rise of mobile, powerful digital ad formats such as video etc.). But undoubtedly one of the attractions is digital’s ability to deliver measurable performance-based product-led advertising – designed to generate online sales and conversions. This has contributed to brands (ranging from consumer packaged goods to fashion brands) spending a growing proportion of budget on product-led digital ads instead of devoting greater amounts to generating brand awareness via TV and bill boards.
There are a number of categories of product ad that have benefited (each of which continues to grow):
- Some traditional keyword-focused search ads fall within the description of product-led advertising
- Google Shopping – Product Listing Ads that display product images and descriptions against relevant searches
- Retargeted social ads such as Facebook dynamic ads that target consumers with products and offers based on their browsing history
The newest category is product-led advertising on ecommerce sites.
For example, brands are showing increasing interest in search ads on Amazon with spend on these ads growing nearly 3x between the 3rd quarter of 2017 and the first quarter of 2018 according to Kenshoo data. It even rose 16% between Q4 2017 and Q1 2018 – despite the fact that online ad spend traditionally peaks in Q4 due to the holiday shopping season when consumer retail spending is at its highest.
What’s also interesting about ecommerce marketing such as this is that it appears to no longer be just about generating online sales. It’s starting to become a branding and awareness exercise.
For example when eMarketer analysed data for the CPG sector it found that:
The overwhelming majority of CPG sales are still done in-store. But consumers are increasingly engaging with these products online, and searches often lead to ecommerce platforms. The most forward-thinking brand managers are now viewing ecommerce as one more marketing channel.
At Kenshoo we see brands aiming higher up the funnel on Amazon, using product-focused ads more for brand awareness and competitive positioning. This is still done in the context of a performance advertising program, but with the understanding that more and more consumers spend their online shopping time on Amazon.
Sponsored product ad on Amazon
When brands want to better engage or win over competitive mindshare they spend more of their budgets on Amazon. We now see a two peak shopping behaviour, where more of customer discovery is done on Amazon – sometimes weeks ahead of the actual shopping decision, which might actually be in-store.
This means that brands are now more keen to understand branding, market share and other directional growth metrics that may fall outside of traditional performance measurement, especially as it relates to the massive ecommerce channel opportunities like Amazon.
Building a broader strategy that may include pulling brand spend into the mix – where traditionally trade spend and co-op budgets ruled – requires that marketing leaders have a more holistic approach to measurement. They need a clearer understanding of a channel’s relative performance – by product – compared to other digital product ad channels, and wider data sets to drive campaign decisions beyond the basic clicks and conversions that are the traditional metrics for product-led marketing.
When brand marketing comes into the mix, measurement standards may shift. Instead of only focusing on the channel’s profitability and spending within the margin, brand spend can open up the purse strings. On an important channel like Amazon, goals such as brand-building and increasing market share can encourage marketers to really attack a category. Where previously the investment in product ads had been measured on pure Return on AdSpend (ROAS), now the advertiser may be tasked with tracking market share or category share, by product.
Typically brand studies, lift tests and other more scientific measurement strategies for brand marketing spend are not easily accomplished on Amazon, but data available through Amazon Retail Analytics Premium and some third party data providers (which many large brands already leverage, just not on their advertising decisions) can help provide a better data set for triangulating the efficacy of investment in Amazon advertising ‘beyond ROAS’.
As well as, seeking out stronger digital retail signals and competitive intelligence, advertising team, need access to effective product-centric marketing automation software that allows them to take meaningful action using these insights.
The brands that win with this new breed of product-led advertising on ecommerce platforms will be the ones that can find the right balance between pure performance marketing and branding, richer data for decision making and technologies for scale and optimisation, together with a product-centric view that encompasses an array of channels and waypoints in the customer journey.