A recent search for lipstick on Amazon showed a Revlon ad at the top of the page that promoted a pack of themed lipsticks created with Amazon for the Prime Video show, "The Marvelous Mrs. Maisel." Underneath that ad, a Burt's Bees lipstick was labeled as an "Amazon's Choice" product, helping it appear high up in search results. Further down the page, an "editorial recommendations" section showed lipsticks picked by InStyle magazine as part of an Amazon affiliate program, followed by lipsticks that offer quick shipping through Amazon Prime.
The example shows how Amazon's approach to advertising is getting harder for advertisers to navigate.
After years of Amazon testing and adding new ad formats and retail placements on its platform, some advertisers now say it's getting harder for them to stand out.
Some of Amazon's tests like mobile video ads are available for advertisers to buy. Others support Amazon's own private-label products and programs like Amazon's Choice that are run by Amazon's retail teams and are not available to advertisers.
"It makes it hard for an advertiser to figure out how to best position their brand because it's largely out of their control," said Travis Johnson, head of Dentsu Aegis Network's Amazon-focused arm Sellwin Consulting. "It feels as though lots of brands are getting hijacked at the last minute by all of these labels and badges across their products."
A spokesperson for Amazon pushed back on the idea that its promotions and retail programs hurt advertisers, pointing to 150 new tools the company has rolled out this year to help third-party sellers. The tools include new bidding controls and dashboards that sellers can use to promote their products.
"We continue adding tools to help selling partners maximize advertising effectiveness," said the spokesperson. "We're also creating more opportunities for brands to focus on storytelling – helping customers to easily shop for and discover brands in our store, in the same way we work to make it easy for them to find, discover, and buy great products from across our vast selection."
Brands have to fend off competitors on Amazon
In interviews with a handful of agencies, sources named a few new placements that show how the number of placements on Amazon are growing and getting harder to cut through.
For example, a placement being tested called posts shows a carousel of recommended items that users can browse and buy from product pages. Sellers cannot pay for their products to appear in the carousel, but Johnson said he expected that would change and that advertisers will eventually have to pay if they want to keep competitors from showing their own products.
Another example is a new ad format called sponsored display that uses machine learning to target shoppers. The ad format shows up on Amazon product pages — including those of the advertiser's competition — and on external publishers' websites.
Melissa Burdick, president of Pacvue, which helps brands buy Amazon ads programmatically, estimated that about 30% of copy on a seller's product pages actually ends up promoting other products. It's formats like these that she said Amazon often tests and introduces, making it hard for advertisers to keep up.
"There's no announcement, it just rolls out — the bigger challenge is explaining that to executives who aren't in it everyday," she said.
Ad prices are a mixed bag for advertisers
With more placements in search results and on product pages, agencies are seeing a mixed bag in pricing.
Marin Software found that prices for sponsored brands and sponsored products, two of Amazon's most popular ad formats, have decreased over the past year. In August, the average cost-per-click of Amazon's ads was $1.17, down from $1.46 in the same month last year, according to the company.
But John Ghiorso, founder and CEO of Amazon ad agency OrcaPacific, said that the cost-per-click for all Amazon ad formats has has increased by a low double-digit percentage over the past year.
"The easy wins that a lot of brands could get two or three years ago by just showing up are not nearly as available," he said.
Advertisers are learning new ways to hack Amazon
Ghiorso said advertisers are increasingly using vendors to help them navigate Amazon's ad business. Amazon even put out a directory to help advertisers find such companies.
"If you look hard enough and are sophisticated enough, there's still a lot of positive ROI opportunity there — it just isn't staring itself in the face like it used to be," he said.
OrcaPacific has used third-party tools to do sophisticated targeting like day-parting. It found that the best time to advertise toys on Amazon is between 6 p.m. and 9 p.m. when parents are home, for example.
Another agency, Mindshare, tried to hack Amazon's algorithm of recommended products. The agency worked with Cheerios to offer a free box of cereal to shoppers who spent more than $40 on Amazon Prime Day in 2018. Sending out the boxes got Cheerios to be a "recommended" product on Amazon that appears at the top of searches for "cereal."
"It is only too crowded if the message being delivered to you is not customized to what you want," said Jeff Malmad, executive director and lead at Shop+ at Mindshare US.