Coronavirus Impacts on Amazon Advertising: A Two-Week Retrospective

I know I can speak for all of us when I say that we're in the midst of an incredibly trying time. And—while I’ve shared many posts in the past couple of years with recommended strategies, best practices, and tips for making the most of advertising programs on sites such as Amazon, Walmart, and more—it's hard to strike the right balance of talking about marketing while being aware that the impact of COVID-19 has varied greatly by industry and individual.

In the spirit of continuing to be your trusted partner, advisor, and sharer of retail media network information during this difficult time, I’ve put together the below recap of changes that we’ve seen on Amazon for advertising partners and how we’ve reacted and adapted to those changes as this disease progressed over the last few weeks.

Essential or Non-Essential?

First and foremost, on 3/17/2020, Amazon advised its Vendors and Sellers that it would be delaying new orders and shipping of non-essential products through 4/5/2020. An essential item as detailed by Amazon is any product that falls within the following categories:

• baby products
• health and household (including personal-care appliances)
• beauty and personal care
• grocery
• industrial and scientific
• pet supplies

 

Brands that find themselves not listed as Essential will find a diminished Purchase Order velocity which will impact revenue goals, stock availability, shipping, and ongoing planning. That said, any orders that took place prior to 3/17/2020 will still be honored by Amazon providing a temporary relief for shell-shocked brands.

As of 4/2/2020, Amazon provided the following direction signalling a re-opening of their fulfillment practices:

“We will continue prioritizing the products that we order into our fulfillment centers beyond the April 5 date referenced in our March 17 announcement, however, we are now able to broaden the list of prioritized products. We will continuously prioritize products dynamically on an item-by-item basis, considering a number of criteria, including customer demand, fulfillment network capacity, and applicable government and health guidelines.”

How Results Have Changed: Essential

Rise manages Amazon Advertising for a variety of brands across many different categories ranging from Health & Household to Computers & Accessories. For our clients deemed Essential, we’re seeing a surge of demand and activity that is leading us to shift budgets forward to cover orders as our supply lines stretch to fulfill them.

Said simply, our Non-Brand and Competitor campaigns are acting as efficiently as our Branded campaigns did in February 2020—even as spend levels increase across all campaign types. Demand and returns have not yet diminished at the accelerated run rate, so it looks like these clients may only be constrained by their ability to keep products in stock at this time.

How Results Have Changed: Non-Essential

Our Non-Essential brands have seen changes as well, albeit usually moving in the opposite direction. There appear to be two core factors affecting conversion here: a shift in consumer priority (for obvious reasons), plus longer delivery times causing customers to postpone orders.

That said, there are key distinctions within this Non-Essential label. We’ve identified two general categories a Non-Essential brand can fall in during this period: Quality of Life (QoL) products and Fringe Want products.

• A Quality of Life product is something that can be delivered to help improve the QoL while the population moves to a quarantine mentality. These can be items like video games, puzzles, backyard games and products, work from home tools, etc.
• A Fringe Want product can be something that’s nice to have, but not something that would improve an immediate QoL need. These can be items like smartphone cases, smart watches, massage guns, earbuds, etc.

 

We’ve gathered a few key insights on these two categories, which could impact how brands move forward through these uncertain times.

Quality of Life Product Results

For these Quality of Life products, while we haven’t necessarily seen a dramatic increase in demand, we conversely haven’t seen an additional dramatic decrease in core customer behavior. For perspective, here’s how key customer behavior metrics (click-through rate and conversion rates) have changed from a YoY perspective:

In the above chart, it is apparent that while all metrics have trended positively YoY this looks to be more of a result of incremental optimizations than any major shift in consumer behavior.

Fringe Want Products

Conversely, Fringe Want products have been hit hard during this period. Take a look at how the Fringe Want products have seen core KPIs degrade in correlation with the COVID-19 pandemic spread in the United States:

It appears that these Fringe Want products saw reductions in performance as the initial quarantine took hold, and the US took more dramatic actions to self-isolate. However, it also appears that some of those fears are calming and customer sentiment is beginning to trend back to more normal performance.

Checking In & Shifting Strategies on the Fly

Communication between interdependent teams will be imperative so everyone is on the same page. Our team has recommended at the very least checking-in with all teams on Mondays and Fridays. This allows us to align at the beginning of the week to confirm inventory levels and at the end of the week to determine if any plans need to shift heading into the weekend.

By opening up communication, Rise identified opportunities to react nimbly and adjust to the quickly shifting landscape on Amazon, and adjusted our ad strategy accordingly. To help you better understand what needs to check-in on, below is a set of details and questions we use with our clients:

Information to Provide to Client Stakeholders

• Updated pacing on budgets and goals
• High-level insights on changes occurring within the account
• Recommendations on what to do next from an advertising POV

 

Information to Ask from Client Stakeholders

• Are you experiencing any supply line issues?
• Do we have enough stock to continue to push advertising spend?
• Should we reserve spend in case the trend continues into the oncoming weeks?
• Are we looking to optimize against top line revenue or continue to focus on efficiency?
• Is there an incremental budget available? Or do we need to look at shifting between existing budgets?

 

I hope the above was helpful in understanding how the Coronavirus is impacting Amazon performance for Rise clients across Essential and Non-Essential products. There are steps advertisers can proactively take to keep their stakeholders in the know as the landscape changes and evolves. If Rise can be of assistance in any way during this time, please reach out.