Of the many things that the internet brought to us, the most beneficial of all was the advent of e-commerce. A relatively new field, less than 30 years old has made groundbreaking advancements into making online ‘shopping’ an experience in itself. Unlike traditional models that adapt to the online culture, E-commerce grew with fast-changing innovation, which enables them to survive and make most of the fast-changing environments.
The happening trends of e-commerce today revolves around logistics, technology, and generations of people who are getting acclimatized to mobile purchases. Quicker deliveries, effective logistics, AI for repetitive queries, exclusively curated landing pages, more advanced and secure payment gateways, and a review nurtured environment are some of the customer retaining trends of this industry.
While entry into an online industry seems easier, sustaining is a different ball game with the ever-growing stiff competition from giants and established seller, who make most through economies of scale to adapt and deploy technologies at their end. An important question to ask at this point is, how do these retailers make noise so that they stand out distinctly over the rest. The key is in advertising. In this study, you will come across 3 big spenders of the e-commerce industry with a focus on in the US market – Amazon, Best Buy and Walmart.
Ad spends in the past one year shows that Amazon tops the list with a whopping $234 million (Orange line); Best Buy with $ 82 Million (Teal line) and Walmart with $ 57 Million (Blue Line). The top spenders put together makeup 30% of the industry of 337 online retailers in the US alone. Each of them has their own strategy that works for them, and we would explore them in our study today
Ad Spends
AMAZON
Started by Jeff Bezos in 1994, is one of the trendsetters in the e-commerce industry, innovating immensely and has brought out a variety of products including the Kindle, Firestick and Alexa amongst others. They have expanded globally, with exclusive websites catering to more than 15+ countries, selling virtually almost everything online. Amazon has surpassed Google as the top destination of US Online shopper way back in 2012, and they are now the critical channel for product and brand discovery. Amazon in the past 4 years has started working with brands to use their platform for advertising seller's products. While this is an interesting study in itself, this begs the question of where Amazon advertises.
Ad Spends
Amazon ad spends takes up a lion’s share. In the past one year, they investment towards advertising has been $ 234 million which is a whopping 19% of ad spenders of all online retailers. Amazon has never been more open about its advertising strategy. However, with the immense penetration, we can deduce the ways and means they get their potential customers to go to their website.
Amazon has a healthy mix of Direct (29%) and Programmatic ads (70%) spend. Direct advertising includes TV infomercials and other personal digital marketing efforts that directly reach a larger group of customers without targeted content. Much of their campaigns reach the mailbox, and despite clogging them, it is still one of the easiest ways to get clients to take on a specific call to action.
With their advent into technology, it would be a surprise if they did not leverage their knowledge into programmatic advertising. Through frequent ad pop-ups on the site searches, and the sheer frequency of seeing the ads enables the ‘buy’ click happen.
They spend a quarter of their ad expenses on Direct Buy and Google. Direct buy helps them eliminate the middlemen, in addition to getting them across a larger group of people; and the rest being spent on the targeted audience. It is interesting to note that Amazon spends close to 15% on YouTube as well, to cater to their high video-based advertisements.
Most of their ads are seen at news websites, apart from entertainment channels and leisure activities. With their widespread product options, their scope of advertising and the audience they cater to becomes significantly huge.
Creatives
Amazon utilizes all types of creatives to get their products across. Since their focus is on convenience in shopping above all, in addition to their unique products, their advertisement content highlights the same effect. They also focus on reviews and ensures that customer satisfaction is met sufficiently.
The frequency of ad visibility, especially when the customer had been browsing some products are managed through images, while their focus on making quality videos to promote their sale days, and other key features has often given them remarkable success.
Campaigns
One of their key strengths is their ‘Prime’ subscribers. They drive their campaigns through many segments. They have sales ahead of the holidays, creating need-based sale days (Eg. Back to school), boost their prime base through targeted offers and benefits, creating a need to be part of the niche.
The ensure that their call to action pop-ups either in terms of stand out buttons or try inducing the need factor by displaying a variety of products that trigger the need to purchase in their site. Their videos are short and to the point, Amazon also ensures that their ads are inclusive and generally breaking the stereotypical norms of a household.
BEST BUY
America's very own consumer electrical retailer started operations in 1966 as Sound of Music, which sold stereos. Sound of Music was rebranded as Best Buy in 1983. Today Best Buy is a multinational company with its presence across Canada, US and Mexico. They recently updated their logo and tweaked their campaigns. Their marketing strategy updated in May 2018 focuses on ‘Let’s talk about what’s possible’.
Ad Spends
Best Buy comes next to Amazon with ad spends $82 Million which is roughly 7% of the total ad spent by the entire Industry. Their rebranding has helped them position themselves as the provider of services and solutions in addition to their existing business line.
Catering to a wide audience, and growing interest from millennials, they pump their ad spends towards direct advertising more than Programmatic advertising (unlike Amazon or Walmart). Their direct marketing works as have a well-established customer base in the US through e-mail campaigns, coupons, and much more. This establishes that personal touch with which they spread across the county. Naturally, they spend 55% of the ad expenditure through Direct Buy.
Best Buy pumps in their ads through published News channels, in addition to entertainment and technology websites where their potential customer flock.
Creatives
Their ads were initially speaking about ‘Expert Services and Unbeatable Prices’ which worked for 30 years until recently they re-branded.
Best Buy now explores HTML5, Image and Videos to get their advertising across their audience. The use HTML5 to ensure that their call to actions pops up – making it convenient to click. They use black and white videos with the t-shirts of their employees standing out in blue.
Campaigns
In the last one-year, Best Buy revisited their strategy and has given their brand a much-needed facelift. Best Buy now looks at connecting with their audience on a more personal level breaking the inherent issue of selling online. Through conversational tone, and easy to approach mindsets, with the employees being patient to handle the repetitive queries that customer usually has.
By opting to provide unparallel customer-centric service, they have set themselves away from the price wars with Amazon and others
WALMART
Walmart is the household. Founded in1969, they have now expanded into 11,500 plus stores across the globe. Within 20 years since its inception, they had become the largest and the most profitable retailer. In 2018, started targeting online advertising as an additional source of income. In the past year, and they have hired two new people to oversee their online marketing efforts.
Ad Spends
Walmart has spent close to $ 57 Million which is roughly 5% of total ad expenses by all online retailers. Like Amazon and Best Buy, Walmart gives a greater thrust to mobile advertisers.
Since they opt for around the year campaigns, their spends spikes whenever they run a promotion, similar to Amazon, which is an inherent advantage of online retailers because of non-seasonality of their vast array of products.
Walmart leverages its immense knowledge of knowing the local customers and tailor making advertisements target these specific audiences, and programmatic ads serve them in addition to their existing database. The sheer number of their brick and motor stores helps them to reach their target group easily. Walmart has also tapped into Native Ads, and have seen good converts.
Like Amazon and Best Buy, Walmart also advertises heavily on News Websites in addition to its focus of entertainment websites. Walmart also uses Yahoo to publish their ads, especially through yahoo answers. This helps them convert better as they give solutions by means of their ads.
Creatives
They rely heavily on images to get their advertising across. In a visual-driven society, this helps them carve a name for themselves. They use other types of ads like HTML5, Videos, and text in manners where it sees fit.
With a change in management, and with a growing interest in native ads, a change in the type of ads can be expected.
Campaigns
Walmart since its inception, has been committed to selling products at the lowest prices. They use economies of scale to make the best use of prices. The competitive pricing of Walmart is well-known globally. They aggressive bargaining tendencies make low prices their USP. They earn almost 60% of their income exclusively from its stores situated across the US.
Similar to Amazon, they market heavily on quicker deliveries, promote the brands that they sell and also seen to use interesting wordplays to garner attention. Their call to action always stands out in white, popping out while not being on the face.
TOP AD SPENDERS
While Amazon, Best Buy and Walmart are currently the top spenders spending about 30% of 337 online retailers, here is the list of top ten spenders which account to 50% of all ad spends.
While advertisements sure make a sale, the quick turnarounds and effectively handling customer queries comes ensures that there is a loyal customer base. It also serves well to remember that word-of-mouth is perhaps one of the best sources of advertising.
Data Source | adbeat.com
