Amazon Unveils New Options for Advertisers as Shoppers Prepare to Cut Spending

Channel Bakers’ Reports - IMA

Originally featured in Cheddar News

With social distancing rules in place, people shifted to buying online during the pandemic and companies like Amazon profited. Now that e-commerce has become more commonplace, the tech giant wants to help companies — and itself — succeed in the online retail environment.

“Companies that were selling 10 percent of their product online suddenly found themselves selling 50 percent or more online,” said Josh Kreitzer, Channel Bakers founder and CEO said. “Post-pandemic we are seeing online buying continue to thrive. Those brands that were ready for online selling benefited tremendously.”

Amazon wants companies to continue to use its services. At its conference unBoxed 2022 in New York City this week, the company unveiled new advertising solutions to help brands reach customers, including ad technology capabilities, and measurement.

Expansions to Sponsored Display ads will allow companies to offer credits in their online ads, and in some cases may feature items that are not for sale on Amazon. It will also branch into physical store advertising, through digital billboards in Amazon Fresh stores. Many of these new ad options are also coming to Amazon video and streaming media.

“Amazon is doubling down on things like measuring offline impact and creating more engaging content through sight, sound, and motion,” said Carl Goedjen, the founder and president of the full-service agency Global Overview. “We’re in a moment where investment performance is critically examined, so Amazon’s expansion of measurement tools is paramount and the visibility Amazon provides allows brands to optimize as they go.”

While advertising is not a major part of Amazon’s revenue stream, it is a growing one. It is the third-largest advertising platform in the world according to Insider Intelligence, thanks to the fact many brands can promote their items on its platform which can lead to direct sales. The company has been increasingly courting agencies and companies to shift marketing dollars to them, participating in the digital advertising NewFronts this year for the first time as well as scaling up events like unBoxed.

Amazon announced on Thursday that it beat expectations, bringing in $9.55 billion in advertising revenue in Q3 of 2022. During Q2 2022, it brought in $8.76 billion, ahead of analyst estimates.

But as people become more worried about their budgets, it’s adding another wrinkle to companies trying to continue strong sales during this holiday season. According to the BMO Real Financial Progress Index, 28 percent of Americans plan to cut back on spending during the final quarter of the year and 34 percent are delaying major purchases.

“Brands, but also consumers, are really anxious with a looming recession,” said Beth Wall, Global Overview vice president of customer marketing and sales. “We’re helping brands be mindful of the realities their customers are facing, especially for the value brands and mid-tier brands with customers who are having to cut back to make ends-meet. These are heavy headwinds that require a lot of empathy, and brands need a thoughtful ad strategy that considers not only proper targeting but messaging that resonates with the consumer.”

On top of that, supply chain issues still loom.

“Brands are sweating out a number of things this holiday season,” Channel Baker’s Kreitzer said. “At the heart of it all is consumer confidence. Will customers be shopping? We think they will be, and so do a lot of brands. But we are still having supply issues. Some of the big retailers are not placing POs and are trying to work through old inventory.”

Josh Taylor, general manager of Global Overview’s Europe division, said he was most excited about the sponsored display and streaming TV options Amazon was adding. Global Overview focuses on Amazon advertising specifically.

“Overall, I think brands will start to think differently,” he said. “Amazon is really showing that they are thinking bigger, tying all their ad solutions together. That way it’s not one solution or the other, it’s both.”