Amazon is projected to rank among the top ten U.S. companies in digital advertising revenue this year, behind only behemoths like Google and Facebook. Consequently, brands have begun experimenting with the platform’s Headline Search Ads – keyword-targeted, cost-per-click ads that appear above first-page Amazon search results. While most brands that invest in these products are smaller vendors, L2’s Insight Report: AMS Headline Search Ads predicts the placements will become more expensive as large enterprises get involved.
An increasing number of brands in L2’s Digital IQ Index: Personal Care have invested in Headline Search Ads. In November, Index brand ads were served against 64% of Personal Care brand term searches, up from 43% in August. However, these brands primarily use Headline Search Ads to intercept consumer traffic to competitor products, rather than purchasing against their own branded search terms. In November, only 11% of Index Brands purchased Headline Search Ads against branded keywords.
Independent vendors serve most Headline Search Ads, which are part of Amazon Marketing Services (a set of ad products developed for smaller vendors and sellers.) The outsourcing keeps costs low, but they can rise as larger enterprises decide to take advantage of these services. While Dove accounted for the majority of competitive Headline Search Ad buys in November, other personal care vendors with comparable ad buys on the platform – Oz Naturals, Therabreath, and Truskin – had far less market share.
If large Index brands continue to invest in Headline Search Ads, smaller players will likely be priced out of Amazon’s auction-based system. The beauty industry faced a similar situation in 2014, when Procter & Gamble and Unilever’s competitive focus and dedicated budgets drove up spend on Google paid search products by 75%. Therefore, the study recommends that brands invest in AMS advertising while prices are still affordable.