Retailers are increasingly switching to Amazon ads over Facebook and Google. A new report reveals why.
Amazon reported a record-breaking $72 billion in sales this week for its Q4 earnings.
Perhaps the most surprising figure: the company's advertising business, which grew 95% in Q4 and has quickly become the online retailer's fastest growing segment.
This has the traditional Facebook-Google digital duopoly worried.
While Facebook and Google still account for 58% of overall US online advertising, and Amazon remains a distant third at 7%, the situation is changing rapidly.
A new report by Nanigans reveals that retail marketers are increasingly switching to Amazon to do their online advertising.
The report, which surveyed 100 retail marketers, shows that 14% of digital ad budgets were being allocated to Amazon. This was not that far behind Google and Facebook which had 21% and 19% respectively.
Other advertising platforms included:
Out of the 100 retail marketers surveyed, half of them said they were planning to increase their ad spending on the platform, while the other half (47%) said they were going to maintain their current spending levels.
The average retailer increased ad spending on Amazon by 25%.
Why are retailers switching to Amazon?
It looks like Amazon's features are simply outperforming those of Facebook and Google.
39% of retail marketers said Amazon had better ROAS than Google, and 54% said Amazon ROAS was better than Facebook.
For CPMs it was the same story, with 32% saying it was better than Google's and 38% better than Facebook.
Only 5% of marketers said Facebook had better attribution than Amazon and only 13% said Google's was better.
Amazon also outperformed with reporting features. Only 10% said Facebook had better reporting than Amazon and only 16% said Google's was better.
The majority of retail marketers preferred Amazon in all categories compared to Facebook or Google.
Amazon vs Google
Who has better ROAS?
Who has better CPM?
Who has better Reporting?
Who has better Campaign Management?
Who has better Attribution?
Amazon vs Facebook
The top three reasons retail marketers gave for choosing Amazon included:
- Strong performance and ROI
- The size of Amazon's audience
- The presence of their target audience on the platform.
Other important factors included high purchasing intent among Amazon users as well as a wish to diversify their ad budgets from Google and Facebook.
Only 7% said they were using amazon because of the ease of ad buying on the platform and only 6% said it had to do with quality of Amazon's tools or the perception of Amazon as a premium brand.
What concerns do marketers have about Amazon?
Despite being largely satisfied with the platform, marketers have some concerns:
- 57% believe Amazon will misuse consumer data in the future
- 48% expect consumers to eventually be turned off by Amazon ads
- 40% are worried Amazon has too much of their data
- 31% view Amazon’s retail business as a competitor
Finally, 75% of marketers surveyed would like to have the ability to link Amazon ads to their own ecommerce websites and apps. Right now they are limited to Amazon.com
You can read the full report here.