Pacvue Releases Report On Amazon's Q2 Advertising Growth During COVID-19

SEATTLE, Aug. 4, 2020 /PRNewswire-PRWeb/ -- Pacvue, an enterprise platform for brands, sellers, and agencies to manage their eCommerce advertising by combining holistic performance data with recommended actions, today released Q2 2020 CPC Report: Amazon Ad Growth Through an Uncertain Market. For the full report, including detailed methodologies and raw data, visit https://www.pacvue.com/q2-2020-cpc-report.

Key findings from the report include:

• Amazon cost-per-clicks (CPCs) dropped in April and May, mainly due to the pandemic, and Amazon delayed shipment on non-essential categories.
• Amazon CPCs rebounded in June to near pre-COVID-19 levels.
• Out-of-stock products, shipping delays, and other complexities caused budget uncertainty.
• Sponsored Brand return on ad spend (ROAS) overtook Sponsored Product ROAS for the first time.

"We created this report as a guide for brands looking to better understand advertising with Amazon during a very uncertain period," said Melissa Burdick, co-founder and president of Pacvue. "Our data insights show that despite the peak panic buying tailwind, Q2 saw CPCs return to pre-covid levels in most categories on Amazon. However, due to underspent budget with out of stock issues, winding down brick and mortar advertising, etc., we expect to see a surge in competitiveness in the remainder of the year."

The data in the report is sourced from Pacvue's proprietary Amazon keyword tracking database, which tracks ASINs from small, mid-sized, and large advertisers and aggregates data across every major product category. The Q2 2020 CPC Report also includes month-to-month data to better display the effects of COVID-19 on Amazon advertising.

With COVID-19 still affecting US spending habits and the overall economy, Q2 of 2020 saw fluctuations in the costs and strategies for advertising on Amazon. Despite lower CPCs and budget uncertainties, ROAS and advertising budgets increased significantly.

The overall drop in CPCs in Q2 can be clearly seen in April and May compared to the spike caused by early COVID panic-buying. This is likely due to COVID contraction as Amazon focused on essential verticals and consumers limited purchases of luxury items. Additionally, the surge of online shopping traffic, combined with the uncertainty of advertisers' budget, led to cheaper bids. However, June saw a rebound in CPCs as online shopping remained steady and competitiveness across most categories increased.

Despite budget uncertainties, average daily spending increased for both Sponsored Brand ads and Sponsored Product ads.

In Q2 and continuing into Q3, manufacturer shortages in availability of consumer packaged goods (CPG) have led to increased noise in daily pacing. Thanks to improved ROAS, this uncertainty did not see an overall decrease in ad budgets for most industries and instead saw advertisers getting more strategic with their ad spend. For categories which were dark due to lack of inventory, back half budgets are looking robust. This could lead to CPCs increasing in Q3 and Q4 as companies work with inflated budgets.

Despite Amazon's push for advertisers to adopt new offerings such as Sponsored Display and enhanced Sponsored Brand, these changes have not shown a significant impact on ad strategies. Advertisers with robust foundations continue to focus on the fundamentals of Sponsored Products and static Sponsored Brands and using these new offerings as enhancements. Products such as Sponsored Brand Video are showing good efficiencies and in general these new enhancements are welcome additions to well rounded advertising campaigns..

A closer look at the data insights:

Click-through rate for Sponsored Product ads and Sponsored Brand ads converge in Q2 2020.

• Q2 brings the big gap in CTR for Sponsored Product ads and Sponsored Brand ads to a bare minimum. CTR for Sponsored Brand ads fell from 0.58% in Q1 2020 to 0.44% in Q2 2020. For Sponsored Product ads the change was the opposite - CTR rose from 0.35% to 0.41%.
• CTR for Sponsored Product ads are back at the same level they were a year ago in Q2 2019, and even higher than they were pre-COVID-19 in Q4 2019. Meanwhile, there is a downward trend for CTR for Sponsored Brand ads.
• The average CTR for Sponsored Brand ads over the last five quarters is, however, still significantly higher than for Sponsored Products. The average CTR for Sponsored Brand ads was 0.53% compared to 0.38% for Sponsored Product ads.

ROAS on Sponsored Brand ads surpassed ROAS on Sponsored Product ads.

• With a decline in CPC for both Sponsored Product ads and Sponsored Brand ads, there was an increase in ROAS. Sponsored Brand ads have the biggest quarter-over- quarter growth of 22%, while Sponsored Product ads grew 8% in the same period.
• However, Sponsored Brand ads are the only ones that have positive YoY growth in ROAS in both Q1 2020 (15%) and Q2 2020 (32%). This is also the first time in the last year that ROAS on Sponsored Brand ads surpassed ROAS on Sponsored Product ads.

CPA for Sponsored Brands decreased by almost 25%.

• Sponsored Product ads still have the most cost-efficient performance, but only marginally compared to other quarters. In Q2 2020, CPA for Sponsored Brand ads was $6.91 and $6.45 for Sponsored Product ads.
• For Sponsored Brand ads this is a particularly big change in CPA. In Q1 we saw a CPA of $8.17, which means CPA decreased by almost 25%.

Conversion for Sponsored Brand ads is still better than for Sponsored Product ads.

• The conversion rate for Sponsored Brand ads is higher than for Sponsored Product ads for the second consecutive quarter. The difference between the two increased this quarter despite the fact that both Sponsored Product ads and Sponsored Brand ads decreased QoQ by 11% and 2% respectively.
• When it comes to yearly growth, the situation is quite different. Compared to the same time last year, conversion rates for Sponsored Brand ads grew 33%, while the conversion rate for Sponsored Product ads decreased by 7%.

Average daily spend is increasing for both Sponsored Brand ads and Sponsored Product ads.

• Average daily spend has increased both QoQ and YoY for both ad types. On a quarterly basis, both Sponsored Brand ads and Sponsored Product ads grew by 13% and 14% respectively.
• In terms of a yearly change, daily spend on Sponsored Brand ads has increased dramatically - 78% - compared to 23% for daily spend on Sponsored Product ads.

About Pacvue:
Pacvue is a leading eCommerce SaaS platform that empowers agencies, brands and sellers to programmatically manage and optimize their advertising on Amazon. Created by industry experts, Pacvue combines AI algorithms and specialized eCommerce and advertising expertise to help their customers grow their share of voice, increase sales and improve profitability.

Headquartered in Seattle, the Pacvue team consists of Amazon veterans and eCommerce leaders united by a passion for technology, digital media strategy and data. By combining deep industry knowledge with cutting-edge technology, the company is uniquely positioned to drive dynamic results for their clients, which include up-and-coming to multi-billion-dollar brands, mission-driven companies, international agencies, and everything in between. For more information, visit http://www.pacvue.com.

SOURCE Pacvue

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