Can Anyone Beat Amazon at SEM?
This is a guest post by Gregg Hamilton, Senior Vice President of Research & Analytics and Business Development at AdGooroo. You can reach him at firstname.lastname@example.org or follow him on twitter at @AdGoorooG.
As the author of a newly published whitepaper analyzing Amazon’s paid search campaigns compared to its competitors, I read with interest Andrew Davis’ recent Search Engine Watch article “Amazon Passes Google as Top Destination for Shopping Research.” Given my findings—Amazon is by far the largest spender on Google AdWords, for instance, with nearly twice the PPC spend of the next largest retailer—it’s no surprise that 86% of online shoppers have bought at Amazon as Andrew reported.
Amazon is truly in a class by itself when it comes to capturing consumers via its powerful SEM (and SEO) machine. In my research, I found that Amazon received first SERP impressions on U.S. AdWords for more than 230,000 keywords in February, 2012, and for more than 650,000 distinct searched keywords over the past year. Amazon’s “keyword success set”, as I refer to it, is even more impressive when compared to that of other retailers during the same period: Amazon’s success set was 48% larger than Target’s (the next ‘busiest’ brick and mortar competitor during that period in volume of keywords, impressions, spend and clicks), two times larger than Wal-Mart’s, 7.6 times larger than Macy’s and 8.6 times larger than JC Penney’s. It’s no wonder that a common refrain we hear from clients is: “How do we measure up against Amazon and how can we better compete?”
Well, this top-down view does not tell the whole story. I examined three different verticals outside of Amazon’s traditional sweet spot of books, music and other media and found that many retailers in those categories were not only competitive with Amazon in their PPC campaigns but were actually giving the e-tailing giant a run for its money.
In Children’s Products, for instance, Amazon sponsored more of the highest PPC spend keywords in the category than any other retailer (12.7%), but was outperformed by a number of advertisers that had the advantage of strong brand recognition. American Girl, Lego, Hasbro, Toys“R”Us and Children’s Place all garnered more desirable ad positioning as well as a much larger share of impressions on their chosen category keywords: Children’s Place – 81%; American Girl – 69%; Lego – 68%; Toys“R”Us – 50% compared to Amazon’s 31%. Even Target, whose offering and SEM strategy resemble Amazon’s more than the children-centric brands studied, garnered impressions on 52% of the searches performed on the category keywords which they chose to sponsor.
Amazon also led in the percentage of top PPC spend keywords sponsored in the Fashion & Apparel category (13.9 percent), but, again, its competitors reaped more favorable results. The top five SEM advertisers in the category based on ad position—Express, Victoria’s Secret, Bloomingdales, 6pm.com and Loft.com—together earned an average of more than 1,600 impressions per keyword per day on the terms that they sponsored compared to Amazon’s average of 349 impressions per day, indicating a more diverse and less specific set of terms. Further, Amazon had the lowest ad coverage, the second lowest clickthrough rate, and the third highest cost-per-click among the Apparel SEMs studied. Although it trailed the pack in terms of average ad position, Target recorded higher clickthrough rates and a larger share of impressions than Amazon on the category keywords that it sponsored.
Although not traditionally thought of as a provider of automobile parts and accessories, Amazon is most definitely a competitor in the Auto Parts paid search category, as shown by its broad set of sponsored keywords, which was second only in size to AutoZone’s keyword set. However, Amazon’s paid search performance trailed that of its competitors, generating the highest CPC, the lowest average position and only a 13 percent share of impressions on the keywords that it chose to sponsor. AutoZone, O’Reilly Auto Parts and even Target appeared to be competing less with Amazon than with each other.
Make no mistake; there is plenty to praise—and fear—about Amazon, its marketing efforts and its brilliant business model. For example, every day the e-tailer is collecting and leveraging data based on visitors’ product searches, consideration, preferences, wish-lists and actual purchases, which fuels the company’s exceptional CRM engine and helps Amazon maximize the value of each visitor’s checkout by suggesting which products to recommend in-session (while simultaneously helping to predict sell-through in support of ordering and inventory management).
Further, my findings were based on a mere snapshot in time for a company that takes the long view (watch Jeff Bezos’ explanation of the Zappos acquisition on YouTube). A year from now, I would not be surprised to find that Amazon has improved search results in all three of these categories.
Yet, there are valuable lessons to be learned from these findings. Amazon may indeed have already won the battle in books, music and content media, but in other retail categories, well-established retailers with strong brands – Victoria’s Secret, Toys“R”Us, AutoZone, etc.– are not only holding their own but, depending upon which KPI’s one chooses to define success, are actually beating Amazon handily in paid search.
Stay tuned. I plan to provide insight into how these retailers are competing with the Amazon marketing machine in future columns.