Economic uncertainty. We’ve all been there. Those times when every headline screams “recession,” “inflation,” or “market slowdown.”
But are you aware of the kind of impact it makes on advertising your Amazon business?
Such a scenario can leave even the ingenious Amazon sellers asking, “Should I pull back on my ad spend? Should I change my strategy?”
Amazon said it earned $1.26 per share in Q2 2024, ahead of the $1.03 expected by LSEG analysts. However, revenue came in lighter than expected at $147.98 billion versus the $148.56 billion LSEG estimate.
In its latest quarterly earnings report, the company announced $12.77 billion in advertising revenue, marking a 20% year-over-year growth. However, this fell short of Wall Street’s expectations, which anticipated $13 billion for Q2 2024.
48% of advertisers have adjusted media type usage or shifted budget among media types instead of halting advertising spend. Uncertain times don’t necessarily have to put an end to your ecommerce advertising. In fact, they can present an opportunity for sellers who can adapt smartly.
Henry Ford is frequently quoted saying “a man who stops advertising to save money is like a man who stops a clock to save time” and this has time and time again been proven true.
So, what should you be doing during times of economic uncertainty, especially if you’re advertising on Amazon? Let’s break it down.
Key Challenges Faced by Amazon Sellers During Economic Uncertainty
Economic uncertainty brings numerous challenges to business and can have many repercussions across various industries. In this case, Amazon advertising is no exception.
Whether it is rising inflation, fluctuating buyer behavior, or unpredictable global events, we’re all aware that we’re living in uncertain times. As business tightens overtime, so will your advertising budget.
But, remember that marketing is all about understanding the needs of customers and aligning products and services to those needs, irrespective of the uncertain times.
Optimize Existing Ad Campaign when Advertising Budgets Get Tightened
Apart from marketing and advertising budgets tightening, there’s no reason for the scope of your product to reduce.
Focus on optimizing your ad campaigns for maximum efficiency. Prioritize campaigns that deliver high ROI, refine keywords, and sharpen your targeting to stretch your budget further.
If you are running a small to medium-sized business, ad spend is often one of the first areas to face cuts and be at a risk of losing visibility and sales, especially on Amazon, where competition is fierce.
Test different ad types and strategies to see what works best under new market conditions, and double down on those high-performing campaigns.
Shifting Consumer Spending Habits
Economic downturns has led to a change in the way consumers spend. Like you and me, shoppers tend to prioritize essentials rather than luxury goods, which means you the seller needs to adjust your advertising strategy.
If you happen to sell both types of products, promoting high-demand, necessity-based items might bring you more consistent results during these times of uncertainty.
Shift your focus to products that align with changing consumer priorities. Consider using Amazon’s promotions and enable coupon codes to highlight deals and savings in your ad campaigns to attract shoppers. For grocery sellers, leveraging Amazon Fresh Weekly Ads can be particularly effective during economic uncertainty, as consumers actively seek deals on essential household items.
Consider using Amazon’s promotions and enable coupon codes to highlight deals and savings in your ad campaigns to attract shoppers.
Increased Focus on Return on Ad Spend (ROAS)
As an Amazon seller, you may want to know that every dollar spent on advertising is driving results. Amazon’s detailed Campaign analytics can help you track and optimize ROAS, but it requires constant attention and fine-tuning.
ROAS being a critical metric, focus on campaigns driving the highest ROAS and cut back on underperforming ones.
Amazon’s Campaign Manager lets you closely monitor ad performance and adjust bids and targeting based on campaign data. You can explore Amazon marketing stream for real-time campaign performance updates.
Invest more in the ad types and keywords that deliver consistent results, and be ready to pause if something isn’t working.
Rising Competition for Ad Space
Analyze your competitors’ strategies and adjust your bidding accordingly. Focus on long-tail keywords and product niches where competition might be lower, allowing you to maintain visibility without overspending.
You can check out your competition with tools like Amazon’s Brand Analytics to adjust your approach and bidding strategy based on constantly changing market trends.
Rising Customer Acquisition Costs (CAC)
Acquiring new customers becomes quite a hassle in uncertain times and ends up blowing up customer acquisition costs (CAC). This would make it harder for you to see positive ROI from your ad spend.
Focus on increasing customer lifetime value (CLV) through strategies like customer retargeting, customer retention, encouraging repeat purchases, or developing loyalty programs with the help of Amazon account optimization services to ensure your account is fully optimized for long-term success.
Additionally, work on boosting organic discoverability by optimizing product listings with keywords, high-quality images, rating and reviews and other social media advertising for organic search so that you can capture free traffic without solely relying on paid ads.
More Importance on Performance-Based Ad Strategies
Amazon Sponsored Products, which work on a pay-per-click model is what is best advised to use. These strategies offer more control over the budget and ensure that you’re only paying for results.
In uncertain economic times, you need to lean more towards performance-based advertising strategies like sponsored product ads.
Prioritize ad formats that yield the most results. Amazon Sponsored Products and Sponsored Brands allow you to track real-time performance and control advertising costs effectively.
Encourage Customers to Leave Product Reviews
With tighter budgets, you can’t afford to rely entirely on paid advertising that isn’t very easy on your pocket. Request happy customers to leave reviews through Amazon’s “request review” option, as they can boost your visibility and conversions. At the same time, sellers also try to remove negative reviews from Amazon to maintain a strong rating during uncertain times.
Maximizing Ad Potential in a Less Competitive Amazon Market
This is a counterintuitive approach, but one of the best things you can do during an economic downturn is maintain or even increase your ad spend, only if it makes sense for your business.
As other sellers pull back, you’ll have less competition for prime ad spots, and CPC rates often drop. This could be your short-cut to increase your visibility without a massive increase in budget.
“My conversations with marketing leaders have changed a lot over the past couple of months, but they aren’t the same across the board. Different industries are experiencing today’s economic shifts in different ways. Some advertisers are feeling the impact of supply-chain disruptions, while others are seeing economic growth. The one thing I hear consistently is that business leaders are uncertain about what’s to come.”
— Alan Moss, Amazon Ads’ Vice President of Global Advertising Sales
How Economic Conditions Are Changing the Amazon Marketplace
Amazon, as we know, is definitely a highly competitive platform. On one hand, shoppers may become pickier about how they spend, but on the other hand, Amazon’s trusted platform is where they’ll most likely still shop for essentials and value-for-money products.
What Does This Mean for Advertising on Amazon?
- Increased competition in essentials: If you sell items that people need on a regular basis without having any other option(health, household items, etc.), you’ll see heightened demand and competition.
- Luxury items slow down: If you sell high-end goods, you might notice a dip in demand. But this doesn’t mean you need to put a full-stop on your ads.
1. Refine Your Targeting
Tighten your targeting to focus on high-intent shoppers. Instead of doing the guess-game, use Amazon’s targeting tools to get in front of people who are more likely to convert. Closely look at past sales data of the last 3 months, 6 months to see who your most profitable customers are, then double down on similar audiences.
2. Optimize Your Ad Budget
Since you are already finding ways to efficiently allocate your advertising budget, focus on the products that are already performing well or those that align with current consumer trends.
Move a portion of your budget to Sponsored Display ads to re-target shoppers who have viewed your product previously but haven’t yet made a purchase. This will help capture customers who are doing more research before making that purchase.
3. Focus on Value and Deals
Just like us, consumers also love a good deal, especially when they’re worried about their finances. Promote any discounts, bundles, or combo offers you have, and make them clear in your ad copy. A shopper looking for a good deal is more likely to convert if they see value right away.
4. Use A+ Content
With the help of Amazon A+ Content, highlight the benefits of your product with compelling visuals, customer testimonials, and clear copy that conveys true value.
Showcase the long-term value of your product whether it’s durability, multiple uses, or savings over time. This approach can help reassure shoppers they’re making a wise investment.
5. Test, Analyze, and Adjust
Economic uncertainty means consumer habits can change quickly. What worked last month might not be as effective now. Regularly review your campaigns and be prepared to move.
Economic uncertainty presents challenges but also opportunities for businesses willing to go an extra mile. The right Amazon advertising strategy, supported by the expertise of an experienced Amazon PPC agency like Sequence Commerce, can help you not only survive but make the most out of these challenging times.
By refining your ad spend, improving ROAS, reducing CAC, and leveraging performance-based strategies, an ad agency can ensure that every advertising dollar is being spent for a good cause.
Whether you feel stuck with paid ads, organic growth, or customer retention, Amazon experts can offer the guidance, tools, and flexibility needed to succeed in uncertain economic conditions.
Sequence Commerce doesn’t just manage ads but we help you build resilience, optimize strategies, and drive long-term growth for your Amazon business, even in the face of financial uncertainty.
Conclusion
Economic uncertainty is inevitable so you as a marketplace seller should learn how to flow with it. By refining your ad strategy, focusing on value, and staying agile, you can make impactful improvements to your Amazon business.
This economic uncertainty doesn’t have to get in the way of your marketing efforts but could simply add to its betterment.
Jake Gilbert serves as the Chief Revenue Officer (CRO) at Sequence Commerce, where he spearheads all lead generation initiatives and drives the agency’s growth strategy. With a keen analytical mindset, Jake transforms complex marketplace data into actionable insights that deliver measurable results for clients. His expertise spans conversion rate optimization, customer acquisition funnels, and performance marketing specifically tailored to Amazon and e-commerce ecosystems.
At Sequence Commerce, Jake has developed proprietary reporting frameworks that accurately track and attribute revenue across multiple marketing channels, allowing clients to optimize their ad spend with precision. His data-driven approach to revenue optimization has helped numerous brands scale their Amazon presence while maintaining profitable growth metrics. Jake regularly analyzes emerging marketplace trends and platform algorithm changes to refine client strategies and maintain competitive advantages in the increasingly complex e-commerce landscape.
Before joining Sequence Commerce, Jake built successful sales operations for SaaS companies targeting the e-commerce sector, giving him unique insights into both the technical and strategic aspects of online selling. He holds certifications in advanced analytics and digital marketing, and frequently shares his expertise through the Sequence Commerce blog and industry webinars.