Retail Media: Current insights and future research questions
How advertising and retail drivers grow brand health online
Sellers on online marketplaces such as Amazon.com use a variety of retail and advertising services to improve their brand performance, including awareness, consideration and sales. However, frequent success metrics on such funnel stages are needed to quantify their response to different advertising and retail drivers – such as advertising impressions and campaign tactics. For over 122,000 brands and product category combinations, we leverage weekly data from Amazon Brand Index which automatically and regularly measures Amazon shoppers’ brand awareness, consideration and purchases and test how they change with ad and retail actions. Furthermore, we compare these brands’ past media mix to the recommended allocation based on the model’s coefficients. We find that new product launches and upper-funnel advertising products are particularly effective for brands of low level of consideration, while those brands have yet to fully take advantage of these opportunities. Medium and large brands benefit most from lower-funnel advertising. As to funnel stages, all three metrics benefit from number of new reviews, % discount, negative keyword and geo reach campaigns. Furthermore, they all improve with high-traffic shopping events such as Prime Day and Thanksgiving. Interestingly, new product launches and remarketing campaigns only significantly drive brand awareness, suggesting other product and retail factors could determine consideration and revenue. In general, we find fewer drivers for revenue, potentially due to the off-Amazon factors such as word-of-mouth or alternative options at other retails we have no access of data. These results are robust across different product categories, but we find interesting differences in how upper- and middle-funnel ad products succeed in driving sales.
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Sponsored brands video rings up clicks and sales in the short and long run
Video ads are increasingly popular in digital marketing, but advertisers are unsure about how much 8 they improve performance over static ads and which consumer response, such as unmuting or 9 watching through the end, matters most. Using data from the online retail site Amazon.com, we 10 apply causal inference methods to both a monthlong and yearlong time horizon and find support 11 for our hypotheses. First, brands that invested in Sponsored Brands video (SBv) ads in addition to 12 sponsored ads static ads had a 25% higher click-through rate (CTR) and 10% higher year-over13 year sales growth. Second, individual consumer CTR depends on ad format (video vs. static), 14 unmuting, and time watched. For audiences in 15 countries across North America, Europe, the 15 Middle East, Asia, and Australia, we find a 17.7 times higher CTR on SBv versus static images, 16 especially for unmuted versus muted SBv. Furthermore, the muted consumer CTR increases with 17 the viewed video length, with a substantial increase at a viewed video length longer than 5 seconds. 18 Surprisingly, the unmuted CTR remains over 3 times that of muted CTR at all viewed video 19 lengths, showing only a CTR uptick when the video was completed. Thus, if the ad is not watched 20 with sound for its full length (the best-case scenario), advertisers should strive for video ads that 21 (1) are unmuted, even for a short time, or (2) play at least 5 seconds on mute.
Brands usually invest in a portfolio of ad products for brand consideration and conversion. To gauge performance, brands often use ad attributed metrics to compare Return on Advertising Spend (ROAS) across different ad channels. However, we see two major shortcomings with this approach. First, it relies on the 14-day last-click attribution window. Though it is common industry practice, the resulting ROAS does not only favor lower funnel ads, such as paid search, but could change with different attribution models. Second, attributed performance metrics usually don’t consider seasonality, and organic consumer demand changes over the course of the year, which could bias the estimates of the effectiveness of ads. This could result in mistakenly attributing high organic demand to campaign performance. We address these issues with a Seasonal Autoregressive Integrated Moving Average with X/Exogenous Variables (SARIMAX) model, accounting for seasonality and brands’ past performance. This analysis compares ad efficacy on total retail metrics, regardless of attribution methods. We apply this method to Amazon Ads, for fifteen brands in U.S. consumer durables. While the lower funnel ad product (Sponsored Products) sees a lot more current usage, we find that higher funnel ad products such as Sponsored Brands, DSP Display, and Streaming TV Video all have higher efficacy. We recommend brands evaluate their ad product performance at regular cadence to avoid under-utilizing high-performing ad products. We also encourage future research to replicate this methodology in different verticals and locales for generalizability.
UpperFunnelAdEffectivenessAndSeasonalityInDurableConsumerGoods
How much does retail media advertising accelerate new product success?
Many new products are launched in e-commerce. While advertising is believed to enhance new product success, managers often lack the numbers to quantify this benefit to the company. Retail websites offer specific success benchmarks, such as pre-purchase product views, purchase conversion and post-purchase reviews. This paper’s main thesis is that while new products can succeed with or without advertising, digital advertising can help products achieve success faster. Across five categories, this research shows that digital advertising on Amazon.com can cut the time needed to reach success levels by more than half, compared to products that reach these same benchmarks without such advertising.
Bertozzi, Giacomo, et al. “How much does digital advertising accelerate new product success?.” Applied Marketing Analytics 7.4 (2022): 318-328.
Please access the preprint version here: How much does digital advertising accelerate new product success_pauwelspreprint