Introduction
Welcome to the Amazon Advertising Data Trends Review Series for October 2020. This is a monthly blog series where we:
- Breakdown changes in the Amazon advertising landscape
- Pinpoint key areas of improvement
- Provide guidance on future market expectations
If you missed last month’s edition, you can check that out here.
This month is of particular interest due to Prime Day on October 13th-14th. As you’ll see below, Prime Day had a significant impact on the KPI’s, and they may not have moved as you may have expected.
Market Overview
In this section, we break down the aggregate view of the Amazon advertising marketplace. More specifically, we will review what happened to ACoS for October and analyze KPI’s that influenced the movements in ACoS.
What Happened in October & What are the Impacts of Prime Day?
ACoS and Ad Spend per Order increased leading up to Prime Day, then had a sharp decline during Prime Day before slowly recovering to more normal levels. This is remarkably interesting behavior because the increases in these metrics seem to start in mid-late September and ramp up as we get closer to Prime Day. Consumer behavior clearly changes up to 1 month before the Prime Day event!
6 Month View
1 Month View
In the one month view we can more easily see the magnitudes of the impact due to Prime Day. Over the course of Prime Day ACoS dropped approx. 10% in value which is approx. a 29% change, while Ad Spend per Order drops $2 in value which is approx. a 20% change. Post Prime Day these two metrics remain elevated for a few days before recovering to more normal levels.
The trend described above is also seen in Conversion % and Revenue per Click. However, the opposite directional moves. That is, they decrease instead of increase leading up to Prime Day and significantly increase on Prime Day.
6 Month View
1 Month View
Conversions on Prime Day increased by approx. 2% in value, which represents an increase of 24% in the metric. Where Revenue per Click increased by approx. ~$1.50 in value, which represents an increase of 60% in the metric.
Ad Spend per 1000 Impressions and Click Through Rate had large decreases on Prime Day, however remained relatively flat or didn’t have as significant of trends pre and post Prime Day. Cost per Click had relatively little impact due to Prime Day.
Overall, ACoS increased leading up to Prime Day due to conversions reducing up to Prime Day. It seems that as soon as consumers are aware that Prime Day is approaching, they change the normal consumer behavior and convert less prior to Prime Day in order to purchase everything on Prime Day. Then after Prime Day consumer behavior quickly reverts to more normal patterns.
Aggregate Trends
Outside of the Prime Day impacts for October, there are a few key longer-term trends we’re seeing.
Ad Spend per 1000 Impressions and Cost per Click have been steadily increasing since June.
CTR has consistently struggled to break through the 0.40% level. However, this past month it broke through towards the end of October and seems to have held above for the remainder of the month.
It’ll be interesting to see how these key trends emerge over the coming months.
Match Type Prime Day Breakdown
We took a look at how Prime Day impacted each of the match types. We found that the Exact match type was the most sensitive to Prime Day movements in the following metrics:
- Ad Spend per 1000 Impressions
- Conversion %
- Click Through Rate
- Revenue per Click
Phrase and Exact match types were equally sensitive to Prime Day movements in the following metrics:
- ACoS
- Ad Spend per Order
Overall, Exact is the most susceptible to Prime Day increases/decreases, followed by Phrase, with Broad remaining as the least susceptible.
Match Type Breakdown
In previous blog posts we’ve mentioned the convergence of the ACoS by match type and all 3 match types continue to remain converged for October. Additionally, Ad Spend per Order continues to have Phrase and Exact match types converged.
Conversion % - Reaching Yearly Lows
Last month we mentioned that conversions started dropping towards the end of September to reach yearly lows. These yearly lows were breached due to leading up to Prime Day and have since recovered. The expectation is that conversions will stay at more normal levels until leading up to the next Prime Day or another large consumer purchasing day, possibly Black Friday or Cyber Monday.
Placement Type Prime Day Breakdown
Similar to the match type section, we wanted to see which placement types were most sensitive to the Prime Day impact. Due to several ties and combinations between the different placements, the best way to break this down is by KPI:
- ACoS – Other and Detail Page on Amazon were most sensitive
- Ad Spend per 1000 Impressions – Top of Search was most sensitive
- Ad Spend per Order – Other on Amazon was most sensitive
- Conversion % - No clear winner
- Cost per Click – Detail Page on Amazon was most sensitive
- Click Through Rate – Top of Search was most sensitive
- Revenue per Click – Top of Search and Other on Amazon were most sensitive
Overall, Top of Search was most sensitive to Prime Day impacts in 3 of the KPI’s, Other on Amazon for 3 of the KPI’s and the Detail Page on Amazon for 2 of the KPI’s. For the sake of this blog post, the impact due to Prime Day is shown by ACoS below.
October’s Predictions
In this section we forecast what we think may happen to the KPI’s in the preceding month, by reviewing the Year over Year trends. But before we start, let’s dive into what we had forecasted would happen for October:
- Decrease:
- ACoS
- Ad Spend per Order
- CTR%
- Revenue per Click
- Decrease
- Cost per Click
- Remain Flat
- Ad Spend per 1000 Impressions
- Conversion %
As we saw above, Prime Day caused October to be a rather volatile and unpredictable month. Let’s see how we did on our predictions and forecast what we believe will happen in November.
In both 2018 and 2019 we experienced ACoS remain relatively flat, though since we’re coming off a Prime Day in October, we do expect to see ACoS slightly decrease leading into the holiday season.
Ad Spend per 1000 Impressions had a very slight decrease for October, the expectation was for this to remain flat, which isn’t too far off given the decrease was slight. Next month, we are to see a slight decrease given both 2018 and 2019 experienced decreases in November.
Ad spend per Order increased in October, missing expectations. Due to coming off of Prime Day, it’s expected that this will decrease in November.
Conversions decreased in October, while we had expected them to remain flat. In both 2018 and 2019 conversions remained flat in November as well, but since Prime Day was last month, we do expect to see an increase.
Cost per Click had a slight decrease in October, aligning with our expectations. In both 2018 and 2019, there were slight decreases in CPC, therefore expect to see a slight decrease next month.
Click Through Rate remained relatively flat to a slight increase in October, while the expectation was to see a slight decrease. 2019 saw a slight decrease in November, while 2018 was relatively flat. Therefore, do expect to see a slight increase for November.
Revenue per Click had a decrease during October, aligning with expectations. Historically, RPC for November remained relatively flat. But since Prime Day was in October, we do expect to see a slight increase from a recovery.
Conclusion
In Summary, Prime Day was a large driver of the trends starting in late September to mid-October. It was interesting to see that consumer behavior changed almost a month before, in anticipation of Prime Day. Most KPI’s experienced a shock in values during the 2 days of Prime Day. In the preceding days, KPI’s trended towards normal levels.
As we approach the holidays it will be interesting to see if similar patterns emerge due to Black Friday/Cyber Monday or if entirely new shocks to the KPI’s are experienced. Whichever the case, we hope that you had a successful Prime Day in October and are gearing up for the holiday season that’s quickly approaching!
We’ll be reviewing this data and including deeper insights and trends each month. If you have any questions or any data you’d like to see, please reach out.
Entourage: Software to Scale Amazon Ads and Results Driven Management.
