The Rise of Advertising on Ecommerce Marketplaces: 5 Tips to Get Ahead via @ebkendo
We all know, it’s no secret.
Amazon has come to disrupt budgets, raise expectations on conversion rates, and call attention to the quality of what we get for a “click.” (Massive amounts of first-party data is a heck of thing, isn’t it?)
So, instead of rehashing what we already know about the size of the impact to date, let’s pull back a few more levels and take a bigger picture look at:
- What this means.
- Who is joining the party.
- What you should think about as we head into 2020.
Amazon isn’t the first or only marketplace to do advertising – this is just a signal of what is to come, the inevitable, cyclical expansion of advertising.
What we need to do is stop thinking about what is to come in silos and pull our holistic digital butts together. (I want to add other butts, like offline and local, but one thing at a time, eh?)
One thing I want to call out before I start in with the examples is noting a fundamental difference that I hear a lot of search folks complain about when comparing marketplace advertising platforms and options to search.
Remember, advertising is second (and sometimes third or fourth) to selling on the marketplace in revenue generation.
The revenues that a marketplace pulls in from advertising dollars is a fraction of what they pull in from seller fees (category commission rates, ranging from 5%-20% and sometimes as high as 40% of the sale) and store fees (monthly fee).
Adding advertising revenue is pocket change, relatively speaking.
They’re just trying to get you to spend a little more.
So, when you think about investments in the platform, reporting capabilities and attribution, a search engine is highly incentivized to answer those questions and often provide those tools for free to keep you on the platform and searching versus a marketplace.
OK, end rant.
Advertising in Marketplaces
Examples – let’s take a look at a non-exhaustive list of marketplaces now offering self-service-ish advertising:
Invite only marketplace/retailer advertising options:
- Target (via Roundel) (select sellers)
- Kroger (via 8451)
That’s a lot longer list than the big two of Google and Microsoft before it gets social with Facebook/Instagram, Pinterest (ecomm friendly-wise).
Granted, the volumes are top heavy with Amazon and Walmart – those are the two that are making significant investments in their advertising options to expand their operations.
But what interests me is that there is a natural desire to diversify budgets and now we either have to find more budget or steal it from elsewhere.
The Return of Traditional Advertising
The current prediction (February 2019), according to eMarketer, is that traditional ad spending will drop slightly and digital will overtake traditional for the first time this year, ever.
That being said, there are some new players to the traditional space we haven’t seen there before, specifically, startups and D2C brands that are looking for places and spaces to gain awareness and have been pushed out of the digital channels on price or saturation.
Rob Schultz, Roman, told Digiday:
“With new business, you’re going to push for scale and at some point, you get priced out on Facebook prospecting. That’s a trend now – companies are looking for ways to fill the funnel to get people in a re-targeting bucket. Especially with TV – you see a lot of brands on the direct-response side spending more money there because it’s an effective channel. It’s being treated similarly to a digital channel.”
So…cutting budgets from traditional advertising, maybe not a great idea. In fact, you might want to spend more.
Get Ahead of the Rise of Advertising on Marketplaces
I can’t tell you what to do exactly – or where to get the funds, that’s not how this works.
I can only give you what is coming:
- More advertising options on marketplaces.
- More silos to break down.
But here are a few things you can do, organizationally speaking, that will set you up for success to navigate this ever-expanding digital universe.
1. Retail Readiness
This means being able to:
- Compete on pricing, multiple fulfillment centers (or staffing the one appropriately) inventory intelligence (in-stock, quantities and decrementing) in an automated fashion.
- Process returns, customer complaints, reviews and get those orders out the door. The new norm is two days.
Search folks aren’t often involved here – I get it, we sell the thing. But you need to start understanding this stuff, too.
If your .com conversion rates start dropping, slowly, over time and you haven’t been looking to see where else that item is sold…you might be losing sales to Amazon.
If the .com is listing a 7-day shipping window and the brand you’re working for set up FBA (Fulfillment by Amazon) for that item and it has 2-day free shipping with Prime and for a lower price, guess where your conversion went? (Also, you might want to check out the Amazon Attribution beta, if that’s the case.)
2. Content & Creative
Take advantage of the features and functionality that each platform offers – they built it that way for a reason.
Some reasons are better than others, but there are key differences in how they function (for example, Amazon product pages vs. Walmart product pages.)
Plus, having product content that is informative, helpful, customer-friendly, consistent and – well – pretty, causes conversions.
And product pages are crawled, indexed and totally show up in search results. Own that SERP all the way.
3. Internal Organization
This is the number one “thing” I have seen collapse or stunt ecommerce efforts.
If the people in the organization are not incentivized to work outside their boxes within digital, then they won’t.
And if not incentivized, at least having the conversation, getting clear on roles and responsibilities and how those touch upon one another.
Piggybacking off the internal organization piece, if there is not a clear process for rolling out products on which platforms, price points and fulfillment, things get very messy, very fast.
Invest in the tools of the trade that enable growth. Or build it. Whatever.
(Or set fire to the proprietary tool/system that’s been in place since 2010 that requires that one dev guy to hold together, but he’s always busy and therefore is holding the business hostage. A true story, more than once, unfortunately.)
Ask for More
Every year, search marketers get asked to do more – types of ads, targeting, new platforms, new markets, and often with the same tools and resources we had the year before.
In 2020, start asking for more in return to help you navigate and succeed in the expanding digital advertising universe.
For example – point of sale data.
If you’re at a brand or working for one that has brick and mortar stores, what are they doing or getting or could be getting that would be useful.
Some offline attribution would be great, but how about some location-based bidding, on category or product level?
Think about what is popular online: Is that because they can’t get it where they live? And is it bought in-store more elsewhere for those that live nearby vs. online?
Visualization – sure, you’re cool and have a spreadsheet with 20 tabs, 17 formulas, slicers and pivots that you’ve developed over the last two years.
It’s a nerd masterpiece – but face it, it’s the Matrix and you’re Neo. Not everyone can dodge bullets.
Equip yourself with software that makes your life easier and insights faster. Then, when the bullets start flying, you won’t even have to dodge them.
More than anything else though, plan on expansion. It’s happening. Get ahead of it now and own it, rather than it owning you.
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Screenshot taken by author, October 2019