Amazon display ads drive non-Amazon sales, study finds

Dive Brief:

From 70% to 90% of the impact from Amazon display ads drives sales in channels other than Amazon, according to Analytic Partners' latest ROI Genome Report.
Similarly, between 10% and 60% of the impact of search ads on Amazon also reverberate beyond the platform, per Analytic Partners. As a result, the report recommends brands that rely on Amazon sales should emphasize search efforts on the platform, while brands with large offline sales should boost their use of Amazon Display ads.
The report notes that opening a brick-and-mortar store in effect acts as a branding boost that can lead to a 4% to 8% lift in online sales, especially when supported by marketing.

Dive Insight:

For years, physical retailers have fretted that e-commerce would kill physical retail, but Analytic Partners' new report points to the spillover effect between channels in an omnichannel environment. In other words, consumers exposed to a given campaign in one channel often end up buying in another. This phenomenon is particularly present when it comes to mobile ads driving foot traffic to physical stores, but Amazon generating non-Amazon sales is a newer, additional consideration for marketers.

Amazon's spillover effect is likely driven by its unique position in the retail space. Analyst Mary Meeker's 2018 Internet Trends Report found that nearly half of consumers start their search for a new product on Amazon while the giant's online store accounts for almost half of all online retail spend.

In February, eMarketer predicted that Amazon's U.S. ad business could grow by more than 50% this year, and that its share of the overall digital ad market could hit 10% next years, highlighting how Amazon is becoming more of an advertising tool than traditional online retailer.

The evolution of Amazon's role in retail and marketing has led some industry observers to a new and seemingly counterintuitive understanding of advertising on the e-commerce platform: To benefit from advertising to such a large pool of consumers browsing for specific products, brands don't necessarily need to sell their products on Amazon.