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Impacts of COVID-19 on Amazon Advertising

08 Apr 2020 Matt Strietelmeier
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in Digital, Amazon,

COVID-19 has demanded flexibility from brands, creating an ever-changing landscape in which to make business decisions. The current climate has caused significant shifts to consumer behavior, driving consumers online and, of course, to Amazon. Campaign performance is impacted by changes in consumer search behavior, so brands’ Amazon Advertising strategies need to adapt as well. The beauty of Amazon Advertising is that we can identify performance shifts in near-real time, quickly adjusting strategy to best align with business priorities. In my role directing marketplace advertising efforts for our clients, I have been closely attuned to new performance trends via Amazon Advertising as COVID-19 has evolved. In this piece I will share those patterns, also highlighting how our team is adjusting campaign strategy in response.

WHAT WE ARE SEEING

Our typical approach to Amazon Advertising campaign structure is to maintain campaigns that support each stage of the purchase funnel:

  • Upper- and mid-funnel stages are supported by Sponsored Display and Sponsored Brand / Sponsored Product Non-Brand keyword campaigns
  • Lower-funnel stage (conversion) is supported by Sponsored Brand / Sponsored Product Brand keyword campaigns

Currently, our team is observing distinct trends within our upper- and mid-funnel campaigns when compared with our lower-funnel campaigns.

Upper- Mid-Funnel Campaigns

Within upper- and mid-funnel campaigns, (i.e. Non-Brand keyword campaigns and Sponsored Display) click volume has not been significantly impacted. However, for those campaigns we are seeing a sharp drop in conversion rate across all client accounts. My team noticed the same trend as indicated by one of my colleagues: when Google Trends search volume data for the term “coronavirus” spiked on March 13th, there were sharp drops in conversions for these upper- and mid-funnel campaigns; Americans, in that moment, were panicking.

Lower-Funnel Campaigns

Within lower-funnel campaigns (Brand keyword campaigns), conversion rate has not been significantly impacted. However, we are seeing a sharp drop in click volume and, thus, revenue volume also. 

Revenue vs. “Coronavirus” Search Volume

COVID_Advertising

HOW WE ARE RESPONDING

At this time, we are generally recommending a temporary shift in strategy, reducing spend on less efficient upper-funnel tactics to dedicate budget only to the most efficient campaigns.

This means focusing spend on campaigns and/or elements of campaigns that are still driving revenue at a ROAS (or ACoS) that is profitable for their business. For the most part, our team has recommended one of the following three paths for temporary implementation:  

  • Pausing all keywords or category targets within upper-funnel campaigns that have not generated revenue at a specific ACoS threshold within the last 30 days, while fully funding lower-funnel campaigns.
  • Pausing all upper- and mid-funnel campaigns entirely, while fully funding lower-funnel campaigns.
  • Pausing all upper- and mid-funnel campaigns entirely, while partially funding lower-funnel campaigns.

Additionally, there are best practices that we have always employed that still apply when seeking achieve efficiency:

  • For Sponsored Product campaigns, ‘dynamic bids – down only’ or ‘dynamic bids – up and down’ are bidding strategies via which Amazon will automatically lower bids in real-time.
  • Use negative product targeting to remove products that don’t drive clicks or sales with Sponsored Products and Sponsored brands.

As we respond quickly to changes in consumer behavior on Amazon, we have been aided by the near real-time search and performance data at our fingertips which informs our path forward. We are proactively prioritizing marketing efficiency, with a close eye on how to best deliver our clients a strong return. We will continue to monitor performance data, identifying the trends in consumer behavior on Amazon that, in turn, inform smart strategy and achieve goals.

 

As this outbreak evolves, we are constantly updating our insights and data for brands in many categories, with multiple different strategies in mind; subscribe to stay in touch. Or, if you are looking to review how to navigate e-commerce or Amazon during this difficult time, please reach out.

Digital Amazon Strategy

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