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10 Amazon Advertising Trends You Need to Know for 2021
Stay on top of the latest e-commerce and marketplace trends.
This past year has led to significant changes in the way businesses engage customers through platforms like Amazon Advertising, as brands are discovering powerful new strategies and better opportunities for growth.
In the fourth quarter of 2020 alone, Amazon’s advertising revenue grew 64%, to nearly $8 billion, according to Marketing Dive, a testament to the platform’s expanding reach and influence.
As over 1,000 U.S. brands revealed to Feedvisor in our exclusive report, “Brands, Amazon, and the Rise of E-Marketplaces,” more brands than ever before are seeing major returns by investing in Amazon Advertising.
Learn how to optimize your brand’s Amazon Advertising strategy to increase profits with our in-depth guide to the top 10 trends you need to know for 2021.
1. More Brands Are Adopting Amazon Advertising Strategies
2020 was a big year for advertising on Amazon, as more brands than ever before began embracing the platform.
Feedvisor’s new report found that 88% of brands surveyed used Amazon’s advertising platform in 2020, up 21% from the previous year. Additionally, 41% of brands leveraged Amazon Advertising as one of their new strategies deployed during the Covid-19 pandemic.
As Amazon continues to expand its advertising capabilities, expect adoption of the platform to further increase in 2021.
2. Brands See Higher Returns from Amazon Advertising Initiatives
More brands seem to be embracing Amazon Advertising because of the platform’s potential for major returns.
Our survey of 1,000 U.S. brands revealed that 51% of brands saw a return of 7x or more on their Amazon Advertising initiatives, up from 47% the previous year. Meanwhile, 39% of brands saw returns of 4x-6x.
As brands invest more in the platform this year, make sure your business is employing the right data-driven strategies to take advantage of these benefits.
3. Increased Competition Fuels Amazon Ad Spending
Amazon Advertising is becoming an increasingly competitive playing field thanks to the influx of new brands that have adopted the platform over this past year.
That competition — coupled with the high ROI opportunity — is pushing businesses to up their Amazon ad spending. Our report found that 59% of brands spend over $60,000 monthly on Amazon Advertising, up from 38% last year. Another 35% of brands spend between $61,000 and $80,000 per month.
With Amazon forecasted to net over $13 billion in e-commerce channel ad revenue last year, expect to see monthly advertising spending increases from brands in 2021.
4. Diversity of Brands Advertising on Amazon
Brands of different categories are finding success by adopting Amazon Advertising.
According to our new report, of the brands that advertise on Amazon, 21% are 1P, while 19% are 3P brands. Meanwhile, hybrids brands make up the largest group at 60%.
With so many advertising capabilities available, Amazon is transforming into a platform that can meet the needs of all kinds of brands.
5. Brands See Value in Pay-to-Play Advertising Model
The 2021 Feedvisor report reveals that brands are willing to invest their advertising dollars into pay-to-play models that generate results.
64% of brands on Amazon said their Amazon customer acquisition cost (CAC) is higher than that on other platforms, up from 55% last year. However, 27% said their Amazon CAC is the same as other channels, while 10% said it is lower.
Despite the higher cost per customer acquisition, though, 100% of brands said they see value in Amazon Advertising, up from 98% last year.
6. Amazon’s Full-Funnel Transformation
Amazon is proving to be a powerful, full-funnel platform, capable of reaching people at any stage in the buyer’s journey.
Feedvisor’s latest report details how brands see the value of advertising on Amazon for a variety of important goals. Specifically, 68% of brands said they use it to drive brand awareness, 65% use it to acquire new customers, while 60% said they use it to drive sales.
Amazon and the ad types it offers can be utilized in a myriad of advertising strategies from the top to the bottom of the funnel.
7. Increased Usage of Amazon DSP
In 2020, more brands began using Amazon DSP as another resource for maximizing their advertising strategies.
Overall, 26% more brands leveraged Amazon DSP compared to the previous year. In addition, 51% of brands on Amazon cited Amazon DSP as producing the greatest return on ad spend (RoAS).
Expect brands to continue exploring Amazon DSP’s capabilities in 2021, while also experimenting with other new ad types as Amazon expands its suite of ad offerings.
8. Sponsored Products Generate the Greatest RoAS
While brands find great value with each of Amazon’s ad types, Sponsored Products was a standout among those surveyed in our new report.
56% of brands said Sponsored Products generate the greatest RoAS, with Sponsored Brands and Sponsored Display coming in second and third on the list, respectively.
As a core element of Amazon Advertising, brands must ensure that they are optimizing their Sponsored Products ads to reach more customers and increase conversions.
9. Mobile Ads Drive Higher ROI for Brands
The smartphone revolution has not slowed down, as brands continued investing in their mobile advertising strategies.
According to the report, 63% of brands stated that mobile ads drive the greatest ROI, followed closely by desktop and video.
Since m-commerce reached $284 billion — or 45% of the total U.S. e-commerce market — in 2020, expect mobile ads to expand their dominance throughout 2021 and beyond.
10. Brands Are Advertising More Strategically
As competition and budgets increase, brands are realizing the importance of taking a strategic approach to advertising on Amazon. Feedvisor’s report revealed that 30% of brands on Amazon advertise consistently throughout the year, which is down significantly from 51% who did so the previous year.
Brands are pivoting to advertising during peak times like Prime Day and the Q4 holiday season, with 29% of brands saying they advertise more during those periods. More brands are also advertising exclusively during Prime Day and the holidays compared to last year.
Having the right strategies and partners in place to optimize your advertising on Amazon are key to ensuring that every dollar of your budget goes to driving results.
As Feedvisor’s survey of over 1,000 leading U.S. brands has shown, Amazon Advertising must play a critical role in your brand’s strategies for growth and engaging with customers.
Despite its complexity and ever-evolving features, Amazon Advertising is an essential tool for transforming your business, and Feedvisor can help you master it. Connect with us today to get started on taking your brand to the next level in 2021.