Amazon doesn’t generally speak to future plans, so it didn’t have much to say about what 2020 has in store for its growing advertising business. Agency insiders who work with clients on the platform, however, say they expect big changes in 2020, especially when it comes to data and insights.
Amazon got a late start in digital marketing, so it still trails Google and Facebook in both revenue and tools.
But Eric Heller, chief knowledge officer at digital marketing company Wunderman Thompson, said he’d rather be Amazon in this scenario.
“If you imagine Google going through a forest with a machete and creating this from scratch, Amazon is coming through eight to 10 years later, and someone has already macheted through the forest,” Heller said. “You’re late, but … you’re able to basically … reuse learnings that are already well-trodden.”
That’s not to say Amazon will simply follow in Google’s footsteps without any innovation of its own.
Andrew Ruegger, managing partner and head of commerce and data science at advertising media company GroupM, said Amazon will have to “unpack their platform in a way that makes information available to advertisers and to brands that previously hasn’t been made available,” in part because the market is becoming more competitive and expensive—WPP has seen the price of search ads like sponsored products, sponsored brands and sponsored display ads triple since 2017.
But even as digital budgets shift to Amazon, advertisers are complaining about its tools. And while we’re likely to see “a ton of investment” in 2020, how that translates to specific products is hard to say, according to Rob Gonzalez, CMO of product experience management platform Salsify. It will depend on platform usage, so we’ll see more investment in whatever advertisers find useful as well as “anywhere that drives the top line,” Gonzalez said.
Where Amazon still lags
For now, agencies’ biggest complaint is that Amazon doesn’t offer as much insight into what’s working and what is not.
Elizabeth Marsten, senior director of strategic marketplace services at digital marketing agency Tinuiti, said you can only go back 30 to 60 days with Amazon, whereas Google offers historical data for all time—or at least back to the beginning of digital marketing time. That’s why her Amazon Advertising wish list includes more historical data.
Another gap lies in keywords. Google has a keyword planner, but Amazon doesn’t have a tool that shows how big the market is for a given keyword. That means brands and agencies can’t calculate what they need to spend in order to maximize their Amazon investments because they don’t know how many times customers are searching for relevant keywords, Ruegger said. In turn, it’s difficult for advertisers to project returns and plan budgets. In 2020, however, we will start to see tools fill this gap, but they won’t be comparable to Google’s Keyword Planner.
“It’s more likely we will see tools surrounding keywords and contextual targeting within Amazon DSP,” Ruegger said.
What’s more, Heller noted, Amazon doesn’t offer insights into how advertisers can grow their market share on the platform, such as by showing advertisers which ads convert the best for their products, Heller said.
“It’s very, very hard to infer right now,” he said.
But, according to Heller, Amazon has indicated it will fill some of these gaps soon and eventually, advertisers will be able to cross-reference Amazon data with their own customer databases.
Building on momentum from 2019
In addition, Amazon will prioritize the OTT video ads it debuted in 2019 and increase its share in programmatic as it focuses on targeting nonendemic advertisers with its OTT offerings, Joshua Kreitzer, CEO of advertising and marketing agency Channel Bakers, said.
And beyond devices like Fire TV, Todd Bowman, senior director of Amazon and product marketplaces at performance marketing agency Merkle, said not to discount Echo as brands start to test audio ads.
2019 also saw a “huge push” for programmatic display advertising via Amazon’s DSP, Kreitzer said.
Marsten, too, expects increased DSP adoption in 2020, particularly among midsize enterprises and especially “DTC that may not be selling on Amazon but have reached saturation with Facebook.”
Finally, Bowman said, Amazon wants its Stores to be more visible, so we may see Amazon test a follow button so it shows up on customers’ homepages.
2020: the year of data-driven insights (and TACOS)
In these respects, Amazon is following Google’s lead. In others, it is forging its own path by using proprietary purchase data to inform ad effectiveness and consumer behavior on- and offline.
Data like customers’ search terms and what they did or didn’t buy helps Amazon place each shopper in different audiences for targeting, Marsten said.
In 2020, we’re likely to see enhanced transparency “and hopefully some extra stuff only Amazon can provide,” said Jason Hartley, senior vice president and national head of search and paid social at digital agency 360i, including insights from consumer interactions like who is clicking and what they’re buying.
One relevant new metric toward that end is Total Advertising Cost of Sale, or TACOS.
Tinuiti said TACOS measures advertising spend relative to total revenue generated, and it may provide better insight into long-term brand growth. When TACOS is decreasing or flat, the product advertised is generating strong or steady sales. When TACOS increases, however, an advertiser is increasing ad spend, but its organic sales are not increasing at the same rate.
Marsten said she predicts advertisers will pay more attention to TACOS in 2020 as it provides a better holistic picture of consumer behavior.
“One thing I’d love to see them do is within reporting to add in commissions, fees and that kind of stuff—that’s where TACOS is coming from,” she said.
Heller anticipates we’ll see clean room technology, which helps advertisers figure out the effectiveness of their ads, no matter where customers finalize a transaction.
Ruegger, too, said Amazon is in a great position to link ads consumers see to what they actually buy. It’s capable of doing this manually, but there’s no tool to do it directly. At least not yet.
Another new tool in beta is Amazon Attribution, which allows users to create tracking templates for channels like social, email, search and display to see how digital marketing tactics off Amazon drive Amazon sales and Amazon activity like clickthroughs, impressions, detail page views, purchase rate and the number of times a product was added to carts.
“You create tracking tags, append [them] to the ad units, campaign, whatever and then go into your Amazon Advertising account and see how [customers] got there,” Marsten said. “One client doesn’t have a transactional ecommerce site but still buys Google ads to drive to Amazon product pages. You append Google ads with the tracking tag and see how many sales on Amazon came from Google ads.”
But she said it’s social where this will really pay off because the channel is not about direct ROI or last click, so Amazon Attribution will help brands see how much they made on Amazon from, for example, an Instagram campaign for a product launch, Marsten said.
Heller noted Amazon doesn’t have “complex tools to allow agencies and brands to really understand how the money they spend affects offsite retail interactions yet,” but these tools are also coming.
Speaking of which, where Amazon may have an advantage over Google and Facebook is in tying ads to sales both on its own platform and offline.
While Google and Facebook can use last-touch attribution models to connect placements to sales, Marsten said, it’s complicated because “all of these platforms, channels and companies all have their own proprietary tech, no one really owns the full answer … and all claim to have some sort of answer.”
This, she said, is not so different than 50 years ago when print, radio and TV ruled.
“Sure, we’re a lot closer with last click than that, but it’s strange to me how we formed this increased expectation at this level,” she said.
Nevertheless, Ruegger said, Google is working on in-store measurement—reportedly by tracking users who are logged in to Gmail or Chrome, which are connected to Google Maps—but he said Google won’t discuss to what extent this is rolled into advertising metrics.
Besides, Google doesn’t always have a true connection to the sale, which is where Amazon can win media share.
“Google doesn’t see the closed loop on purchase, Amazon does,” Ruegger said. “Obviously, measurement is huge challenge for the biggest advertisers. No one knows how many tubes of toothpaste are sold. Amazon can add those tools and features and make it easier for brands to win over mindshare.”