Before an event like Prime Day, Amazon’s major annual sale, the ecommerce giant calls on advertisers to increase their budgets to appeal to shoppers looking for deals.
This got the team at Amazon seller tool Sellics wondering if the additional spend is actually worth it. And, after reviewing the data—which included ad spend, returns, conversion rate and clicks from Prime Day 2019—Sellics determined the additional spend is actually worth it.
But this isn’t just applicable to Prime Day—it also pertains to marquee shopping dates like Black Friday and Cyber Monday.
For starters, Sellics found online retailers more than doubled their pay-per-click (PPC) spend for Prime Day this year compared to the weeks before. In addition, the number of orders increased 98% and advertising sales increased 159%, or 2.6 times, which outpaced the 2.2x increase in ad spend.
Throughout the 48-hour window that was Prime Day 2019, Sellics also found cost-per-click (CPC) rates on Amazon went up 23%, making ads more expensive. But, Sellics said, that increase was offset by a 20% increase in return on ad spend (ROAS). That means the more expensive ads delivered better returns.
The overall conversion rate was up 12%, too, but Sellics said that’s not enough to offset the increase in CPCs. Instead, it’s the 30% increase in average selling price that’s responsible for those enhanced returns rates.
“If you look at the average sale price before and after Prime Day, it is consistently around $30 and so on Prime Day, it goes up to $50,” said Franz Jordan, CEO of Sellics. “Our assumption is they are waiting for events like this to purchase more expensive products to get deals. It kind of makes sense—you don’t wait for Prime Day for a $20 item, but if it’s $150, you do.”
In addition, he said it makes sense for advertisers to increase their budgets and bids on relevant keywords leading up to and on big shopping days—like, say, Prime Day, Black Friday and Cyber Monday—so shoppers know what brands have to offer, but also because the traffic is more valuable.
“Amazon is investing heavily in display,” Jordan said. “Using display before those big days is a smart thing to get [shoppers’] attention.”
And because the audience is bigger during what Amazon calls the Turkey 5—the five-day period from Thanksgiving to Cyber Monday—Jordan expects a similar scenario to play out in the upcoming shopping frenzy.
Clickthrough rates (CTR), however, went down by 28% during Prime Day, according to Sellics’ research. The software company said this is because shoppers are doing more research for more expensive purchases, and they are browsing more on product detail pages to make their decisions.
“This can negatively affect CTRs, as CTRs on product detail pages are usually lower than on other ad placements,” according to Sellics.
In addition, Jordan noted that Amazon curates Prime Day deals on a specific section of its website, so shoppers are scrolling and not necessarily clicking through to a bunch of different products. And when shoppers browse search results and deal pages, they are creating significantly more ad impressions compared to clicks.
“I’m pretty sure the behavior of low CTR will be true for these [upcoming] days as well,” Jordan said. “We’ll likely see more traffic on product detail pages due to a consistent behavior we see throughout the year. The share of volume on product detail pages is probably higher [as holiday shoppers] go directly to the products after they do research before.”
Sellics also found ROAS indicates shopper fatigue as soon as Prime Day is over.
However, because Prime Day stands alone in the summer, this finding won’t likely hold true in Q4. Holiday shopping sustains a high volume on a more consistent basis, so Jordan said it’s likely we’ll see another spike on Black Friday and Cyber Monday, but the overall volume will remain high until the end of the year.