Sponsored ads and display worked better together when launching new products

By: Bharani Nittala, Sr. Analytics and Media Manager

Many advertisers are curious about the performance of different marketing tactics and seek these insights to inform their new product launch marketing strategies.

Story highlights:

Advertisers typically want to grow the sales of their newly launched products quickly, but don’t know how to best do this. In the absence of data, the majority of advertisers now invest only in sponsored ads advertising on Amazon.

This analysis used all products launched in the US on Amazon in 2018 with at least 52 weeks of sales. It quantified how long it took advertised and unadvertised products to reach annual median dollar sales volume for products launched in their category. Results show that advertisers who want to grow sales of their new products quickly should invest in both sponsored ads and Sponsored Display following product launch.

1. Sponsored ads and display worked better together

Advertisers who want to reduce time to grow sales should support new product launches with both sponsored ads and display.

Results show that using sponsored ads and display in the first quarter following product launch reduced the time to reach sales baseline by 64%. Sponsored ads is individually the most effective advertising tactic. Display is also effective at reducing the time to sales baseline (time to reach median sales). However, products supported by sponsored ads and display together reach sales baseline more than 600 basis points (bps) faster than a linear projection of each ad product’s individual effect.

The following visual shows the relative time new products take to reach their sales baseline, indexed vs. unadvertised products. The data show that advertised products that were supported by both sponsored ads and display advertising took the least amount of time to reach baseline. In addition, using sponsored ads and display together reduced the time required to reach baseline more than indicated by a linear projection based on sponsored ads only and display only results.

For example, display alone reduced time to sales baseline by 21%, and sponsored ads alone reduced time to reach sales baseline by 37%. This means that, when they are used together, their reduction could be projected to be (21% + 37% =) 58%. But the observed reduction was actually 64%—a 600bps larger reduction. This supports the idea that sponsored ads and display worked better together when used to support a newly launched product.

Relative time in weeks to reach sales baseline – all successful product launches

Unadvertised

Display only

Sponsored ads only

Sponsored ads and display

Index, Unadvertised = 100%

2. Advertising reduced variability in time to reach sales baseline

Not only did using sponsored ads and display show the least time to reach sales baseline—using sponsored ads and display together also showed the lowest standard deviation (5.5 weeks vs 13.7 weeks for unadvertised products), meaning that there was less variability in time to reach baseline sales.

The following bubble chart shows the standard deviation in weeks to reach sales baseline. The chart also shows results for unadvertised product launches compared to advertised products supported by display only, sponsored ads only, and sponsored ads and display.

Products not supported by advertising had a standard deviation of 13.7 weeks. This compares to standard deviations of 10.9 weeks for products supported by display only, 9.9 weeks for products supported by sponsored ads only, and 5.5 weeks for products supported by both sponsored ads and display. The standard deviation for products supported by both sponsored ads and display was 60% lower than that of unadvertised products.

Lower standard deviation means advertised products had lower variability in time to reach sales baseline. Lower variability is important because it reduces uncertainty, which helps advertisers better formulate their marketing plans.

Variation in number of weeks to reach sales baseline

Unadvertised

Display only

Sponsored ads only

Sponsored ads and display

Research Methodology

This analysis includes data from more than 3,000 products launched in 2018 across 23 product groups, 72 categories, and 93 subcategories to determine which Amazon Ads tactics (sponsored ads, display, or a combination of both) worked best to drive sales at product launch.

It compared advertised products to similar products that did not receive advertising support. Advertised products were grouped by the type of media support they received and by the duration of that support. Products that received only sponsored ads advertising support for more than half of the first quarter (more than 6 weeks) post launch were designated as “sponsored ads only.”

Similarly, products that received only display advertising support for more than half of the first quarter post launch were designated as “display only.” Products that received both sponsored ads and display advertising support for more than half of the first quarter post launch were designated as “sponsored ads and display.”