Our Predictions for Amazon's Q1 of 2020
This year is bound to be full of continued changes, opportunities, and lessons learned for brands that sell on Amazon. Continue reading for a recap for Q4 (2019) and our predictions for Amazon’s Q1 of 2020. Here we share insight into what we learned from working with clients across all categories and what we expect.
A Recap of Amazon’s Q4
In 2019, Amazon released updates, changes, and tests to better the customer, seller, and vendor experiences. The teams at MPS worked closely with clients to stay on top of it all. Our strategists have also taken note of what's important to keep top-of-mind as our clients enter Amazon's Q1 of 2020.
For example, Amazon has continued strides toward growing its presence in digital advertising. The marketplace giant has proven its commitment and capability throughout 2019. Because of this, the need for brands to have a cohesive advertising strategy on the channel is ever-apparent.
In fact, during Q4 of 2019, strategists at MPS found cost-per-clicks (CPCs) and cost-per-impressions (CPMs) increased for clients across all categories year-over-year. Amazon’s DSP platform also continues to perform and drive both on and off-Amazon traffic to product detail pages for these clients.
The teams at MPS have also seen an increase in Amazon-driven modules like those seen below. These modules are used to influence purchase decisions, increase sales across the channel, and offer customers a more personalized experience. Amazon uses its insight into data like buying behaviors and purchase history to populate these sections.
Finally, another trend worth mentioning is how Amazon Live has become a key player in driving deal performance. We’ve seen this to be especially true on peak days and believe it correlates with the number of people that visit and revisit the Today’s Deals page.
Developments in New Betas and Features
In late Q4 of 2019, clients were introduced to Sponsored Brand Video advertisements through an invitation-only beta. We expect this offering to evolve as it begins to scale.
We also look forward to Amazon Advertising and DSP targeting capabilities to advance. There is an opportunity to better cater to mobile users and target based on language preferences. For example, we could see an increase in mobile-specific visuals and the ability to serve shoppers messaging in their preferred language. Language-dynamic features could also infiltrate into a brand’s store on Amazon.com.
Updates and advancements in over-the-top (OTT) advertising will almost certainly play an important role in Amazon's advertising business in 2020. In 2019, MPS worked closely with SharkNinja to get a jump start on what is possible when implementing OTT. The leading housewares brand drove incremental sales through OTT for the holiday season.
We expect more clients and brands to adopt this tactic and Amazon Advertising to release more video options.
Where Will Amazon Shift or Place its Focus?
In 2019, Amazon’s priority was on its top line and driving gross sales and revenue. But in 2020, we anticipate the pendulum could swing back to a focus on Amazon’s bottom line. With net income as the primary focus, brands will see more products be removed from the platform due to profitability issues (“CRaP out,” as it’s referred to in Amazon circles) as Amazon becomes more selective with its sourcing.
Over the last year, Seller Central versus Vendor Central implications and discussion was at an all-time high. Without a clear solution, Amazon will probably work towards a more cohesive approach in 2020 to ensure they’re on level playing fields.
As we touched on earlier, video will be a major player in how brands can engage customers on Amazon. We believe video will be ever-present across the board; in stores, ads, organic results, and product detail pages.
Finally, Amazon will continue trying to wrangle counterfeit products and figure out how to combat the issue. Brands can expect to receive messaging regarding programs like Transparency by Amazon and Project Zero.
The e-commerce industry, as a whole, will continue to evolve and retailers and e-retailers will become more sophisticated. It will be interesting to see what Amazon's Q1 of 2020 means for brands throughout the year. Regardless of what pans out, it is crucial to be prepared and ready to adapt to any changes.
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