In the 1990’s web search engines were the big thing and ranking at the top of search results pages was like winning at the roulette. I remember how important it was to repeat the same keyword over and over again, and to have the keyword in the page title was crucial to ranking in Altavista – the now-forgotten predecessor to Google.

In those days, Search Engine Optimization – SEO, was a nascent industry and most experts were constantly testing to improve their understanding of each search engine’s algorithm. We counted the words, the characters on a page, the number of markup tags and their nature, we removed the “stop words”; fill words that were believed to not be indexed: is, in, at, the, or, because. After removing them, we calculated one of the key ranking factors in that generation of search engines, the keyword density. Could you get it up to 4-5% you were good – in some search engines you had to go even higher to rank.

With Google, the game changed somewhat. It was a new generation of search engine and suddenly, it was not only what was inside the page that counted, but also surrounding factors, and especially links pointing to the website. The nature of SEO changed, link building became a thing. The Google algorithm is believed to have hundreds of ranking signals, some known, some guessed, constantly evolving to provide the most relevant search results to users with changing search behaviour and evolving technology, and all the while keeping abuse at bay.

What is Amazon SEO?

Search Engine Optimization (SEO) is about maximizing the traffic one receives from clicks in search results pages. Users search on a variety of keywords, and the first challenge is to identify the ones that are relevant for your products. The next is to do everything in your power to appear in search results when a user searches using those keywords.

SEO is often consider as a free means of promotion as it does not take sponsored results and other paid ads in the search results page into account. Into consideration even.

SEO on Amazon is focused on optimizing the product listings for a merchant. Each individual product listing has the potential to rank in search results if it is relevant to the search a user performs. But like in traditional SEO, it is not only the page content that matters, external factors are important too. Popularity, authority, links pointing to a webpage are important for ranking on Google. But what is important to make your product rank in the Amazon search engine?

The Amazon search results page

The Amazon search results page is very long and holds many categories of information. The illustration reconstructs an entire search results page and shows the various categories as well as their order of appearance (click to enlarge).

The results categories we found on this page are the following:

• Sponsored results: The top row of products are all sponsored products. This means the brand runs Amazon Sponsored Products advertising targeting the keyword we searched for.
• Best seller & Amazon’s choice: A best selling product in a category carries a badge and is prominently and repeatedly shown in search results. Getting in that position is a huge challenge, as you need to reach the highest amount of sales in your category.
  Amazon’s choice is an editorial choice made by Amazon editors based on a qualitative review.
• Highly rated products: In this section, the products are the ones with the highest ranking based on user reviews. Another great spot to be in but very difficult to reach too.
• Editorial choice: A great chance to stand out if your product is differentiated and discovered by the editorial team.
• Advertising: In this case it was a video advertising results finalizing the custom made top of page spanning more than the first viewable page of results on your screen.
• Organic results: Below the custom-made section comes organic results. It is mainly here SEO makes a difference, and being at the top of this section is a great achievement and can boost sales for a product.

Main ranking factors in the Amazon search algoritm

You can appear prominently in the Amazon search results page via advertising, by being the best selling product, having the highest rating or by having the favour of editors. Beyond those instances, the order of the page is ordered by the algorithm. The A10 algorithm if that is indeed the current version.

There are three main categories of ranking factors in the Amazon search algorithm:

• Product attrativeness
• User experience
• Sales maximization

Source: The Amazon Marketing Report: “Marketing on Amazon 2020”, Innovell 2020

In our illustration we have shown the three categories as well as the individual ranking factors that play into the algorithm. These are further affected by a number of indirect factors as illustrated in the table below:

The range of factors influencing search ranking is long, and optimizing for better ranking can be an ongoing process. There are however, some basic things that need to be in place in order for a product to appear in searches: available inventory, the right price, good ratings and relevant content.

Is Amazon A10 or Amazon A9 the current version of the algorithm?

Right about the time we built the above ranking factors overview in Summer 2020, industry observers reported changes in the Amazon algorithm. This made a number of people announced that Amazon had upgraded to A10. The number of changes in the algorithm wasn’t very high, though. So, was there really an update or is it still a tweaked A9 algoritm we have a hand?

I decided to check what my network on LinkedIn thought, and a majority of people believe the algorithm is now A10 but quite a few voted for A9.

So if there was an update in the algorithm from A9 to A10, what did it do? Most observers mention a higher importance of traffic from external sources. This is a great case for directing external advertising into Amazon campaigns, something we call the “Drive-to-Amazon” strategy.

Some of the other things that changed with the A10 algorithm update was toning down the effect of Amazon’s own advertising and focusing less on sales velocity as opposed to content relevance. These observations are mostly based on hunches and anecdotal evidence.

In the end, who makes the call on what the algorithm is called? Amazon supposedly. But the company is not so accustomed with communicating about internal affairs, so I have found no confirmation of a shift to A10 anywhere. And, at end of the day, what does it matter?

All you need is excellent products, content, sales and fulfillment

Be it A9 or A10, the formula for success on Amazon is fairly well-known: Provide an excellent user experience, sell at a competitive price, and be an active player in the marketplace with a high rate of sales and great reactivity.

Succeeding on Amazon starts with building a strong foundation via optimized product listing and a brand store. Next the build-up of sales history, user reviews and top ratings will make a product climb the sales ranking. Maximizing those sales via Amazon Advertising makes you climb faster, and plugging in traffic from external sources can provide a further boost.

The upside is that the prize money can be well worth the effort. Being at the top of the Amazon search results drives a disproportionately high level of sales. Great user experiences, great SEO and efficient advertising is the key to winning on Amazon. Go for gold.

If you want to go deeper into Amazon marketing and successful strategies on the marketplace, the Amazon Marketing report can help you. It is a commercial report. Discounts are occasionally shared via our newsletter. 

The biggest and most important Amazon market is without a doubt the US market. It weighs 67% of revenues and grew by 19% in 2021. It will be a long time before any other market catches up. If ever! The three following markets: Germany, United Kingdom and Japan add up to only 20% of revenues. And the remaining 15 active markets 14%. Amazon is top-heavy despite a massive international expansion.

[the original article from 2021 has now been updated with 2021 numbers and developments]

The top four markets are directly accounted for in quarterly earnings report. The following five markets, India, France, Italy, Canada and Spain all had more than 150.000 sellers in their local Amazon marketplace according to this overview of third party sellers by country from Statista, and we checked their traffic and GDP per capita to build an initial list. When we initially shared this, we were made aware of actual measured figures which Edge by Ascential provides us with. To our surprise, India is actually the fifth biggest market ahead of France and Italy. For the tenth position, we initially bet on Brazil, but it seems it is Australia that holds that position followed relatively closely by UAE and Mexico.

Managing multiple marketplaces on Amazon

Navigating the various marketplaces can be complex on Amazon. And even more complex for ecommerce outside of Amazon. As the formats and functionalities of market places are essentially the same from one Amazon country to the next, there are a couple of practical solutions in place. In North America, sellers can set up a unified account to cover US, Canada and Mexico. And in Europe, a unified account spans Germany, the United Kingdom, France, Italy, Spain, Netherlands, Poland and Turkey. If you are looking to expand internationally, the Amazon’s Global Selling guide is your go-to destination.

Amazon’s international growth strategy

Amazon appears to have a distinct synergy-driven approach to internationalisation where new markets piggy back on existing ones, and where additional features are rolled out progressively. It is also using existing regional strongholds to build neighbouring markets, as proximity is so important to ensure high quality fulfillment. Brazil may enable an expansion into Argentina in South America in the future, and Germany was a key piece in the puzzle for opening Poland. In recent plans for opening in South Africa and Nigeria, those two are part of the same project, just as Colombia and Chile are grouped together.

There seems to be a fair amount of merchant copy and paste going on to get a marketplace up and running. Product listings are autotranslated and made available in a new marketplace to get it going. There must be both ample supply and demand for a market to function.

Once merchants start flocking to the marketplace, the advertising platform is then rolled out. And with the recent opening of the physical stores, Amazon Go in the UK, perhaps the physical stores branch will start trickling down the top market list in the future. Perhaps Germany, Japan, and regional strongholds such as India and Brazil will be next?

Let’s look at some of the ways Amazon markets are growing and how the international expansion strategy seems to be organized below.

Amazon Advertising

Advertising is one of the first powerpack added after a marketplace opens. There are four types of Amazon Advertising, three of which are intimately tied together with the marketplace:

• Amazon Sponsored Products (which we like to refer to as Amazon paid search due to its similarity with Google Ads)
• Amazon Sponsored Brands
• Amazon Sponsored Display

These three are used by merchants to fight competition on the marketplace and boost their sales. As described in our Amazon Marketing Report, these solutions form an integral part of an Amazon marketing system and have been opened to all the recent marketplaces.

Netherlands, Poland and Sweden are recently opened market places and the advertising branch has not yet been launched. Turkey has been around longer but it is characterized by a small Amazon market share.

The fourth advertising type is the Amazon DSP, the demand side platform allowing advertisers to advertise inside and outside the Amazon platform and a CPM (cost per thousand impressions) model. Amazon DSP could in principle be launched independently from the other ad types, but in practice it seems to tag along with the other types or shortly after.

Amazon Prime

We have a hunch that the roll-out of Amazon’s loyalty program, Prime, follows approximately the same pattern. In Europe, Prime was launched first in the UK in 2007, in France in 2008, Italy in 2010 and Spain in 2011. The trickle down pattern is probably similar across other markets.

What will be the next Amazon market to open?

In recent years, new market places have opened or absorbed in a number of countries: Turkey, Singapore, Saudi Arabia, Egypt, Netherlands, Poland and Sweden. And in a recent article for Business Insider, plans for further expansion were leaked with Belgium up next in 2022 and for next year the plan includes South Africa and Colombia and then Nigeria and Chile.

The launch plan for 2022 – 2023 goes like this according to Business Insider:

• Belgium – Sep, 2022
• South Africa – Feb, 2023
• Colombia – Feb, 2023
• Nigeria- Apr, 2023
• Chile – Apr, 2023

(source: https://www.businessinsider.com/amazon-to-expand-into-5-countries-by-early-next-year-2022-6)

Worldwide domination is still far away

Amazon is experiencing amazing growth, its ad offering is penetrating the triopoly of digital advertising consisting of Google, Meta and Amazon Ads. Physical stores are breaking down the barriers between online and offline retail. But when we look into the details of the domination, Amazon is very top heavy and has a long way to go before it reaches the same level of market power in worldwide markets. As we exposed in our recent report “State of Retail Media 2022”, local Amazons often face competition in the form of local pure players such as Allegro in Poland and Cdiscount in France. They also face vertical marketplaces such as Zalando in beauty and fashion or ManoMano in DIY.

It is interesting to note, though, how the constant progression of Amazon in international markets reinforces existing strongholds and markets as it goes. It may take a while, but the machine seems unstoppable.

If you are aiming to build a more full understanding of Amazon marketing, you find a complete coverage in Innovell’s “Amazon Marketing Report”.

With Amazon Advertisings’ staggering 66% growth in Q4 of 2020, the giants ad offering is now firmly established in the digital media landscape. Amazon Ads has become part of the Triopoly of Digital Advertising together with Google Ads and Facebook Ads. On top of that, the Amazon advertising platform is pacing well above the baseline Amazon e-commerce growth rate, already impressive at over 30%.

But what is Amazon Advertising and who is it for? Can any advertiser make use of the platform? How does it work? Should your business be advertising on Amazon in 2021?

In our research for the Search Trends Report in 2018, we discovered that search marketers specialized in Google Ads and Bing Ads hadn’t adopted Amazon Ads, and that it was below the radar for many advertisers despite having gained critical mass and experiencing much higher growth than the other ad platforms.

What is Amazon Advertising?

Amazon Advertising is a division within Amazon composed of two different offerings, Amazon Sponsored Ads on one hand, and the Demand-Side Platform, Amazon DSP on the other. The names have changed quite a bit in the past, but names like Amazon Media Group (AMG), Amazon Marketing Services (AMS) and Amazon Advertising Platform (AAP) are no longer used.

Amazon still reports on its advertising revenues in a category called “Other” in its quarterly reporting, despite its having passed the 5% mark of Amazon’s earnings.

Amazon Advertising proposes a range of advertising solutions made available to agencies and advertisers inside and outside the marketplace. The primary media placements for Amazon advertisements are inside the marketplace: on product detail pages and in search results pages. Amazon additionally places advertising outside the marketplace on properties it calls O&O: Owned and Operated media. And finally, it has the capability to use ad exchanges such as Rubicon and AppNexus to reach sites completely external to Amazon.

When it comes down to the ads themselves, an Amazon ad can have a wide range of formats. Each depend on the placement and the advertising solution in which it is found. The simplest ads are based on product listings, more advanced ads can be display banners and carrousels, and video is also available in some of the solutions.

Amazon Sponsored Ads or Amazon DSP

Amazon Sponsored Ads and Amazon DSP are two different organisations within Amazon Advertising. The more accessible solution is Amazon Sponsored Ads, which Sellers on the platform can access freely and which is conveniently part of the same accounting as their ecommerce. It is composed of three products, all using the cost per click model (CPC):

• Amazon Sponsored Products: simple and straight forward keyword-based advertising for product listings.
• Amazon Sponsored Brands: keyword, product and category targeting for promoting a brand, logo, text message in more prominent position in the marketplace
• Amazon Sponsored Display: audience targeting, retargeting, display banners using placements inside and outside the marketplace using a CPC model.

The Amazon DSP is a programmatic advertising platform with restricted access. It allows for a much more advanced targeting than Sponsored Display and works on a cost per thousand impressions (CPM) model. It is the Rolls Royce of advertising with Amazon.

6 essential things to know about Amazon Advertising

Amazon Advertising is evolving quickly. Not only is it experiencing phenomenal growth, but the platform and the offering also progress. The recent opening of Sponsored Display to inventory outside of the marketplace is a prominent example. But let’s look at some of the things that don’t change. The keys to advertising on Amazon in 2021.

Advertising is an essential part of being an Amazon merchant

Marketing on Amazon involves showcasing, pricing and describing one’s products and making inventory and shipping available to buyers. It is essential but not necessarily enough to have great reviews and ratings to become a best seller. An increasingly important part of the marketing equation is making sure one’s product is visible to buyers by using advertising.

Amazon advertisements are best for endemic advertisers

Amazon distinguishes advertisers whose products can be found on the platform, endemic advertisers, from advertisers whose products are not marketed there. Non-endemic advertisers fall into categories such as automotive, energy, finance, travel and hospitality, telecommunications and gambling.

Endemic advertisers make up the bulk of ads on the platform as the user journey is short and sweet ending in a measurable conversion directly on the platform. Nationwide non-endemic advertisers may however be interested in building an Amazon advertising strategy because of its large exclusive audiences which can’t be reached via any other advertising platform. The other attrative Amazon DSP asset is the rich audience data the platform can make available for targeting purposes.

Link In and Link Out

Whereas the Amazon platform is pretty much a closed garden where you are either inside or outside, there are a few approaches through which traffic is exchanges with the outside world, such as:

• Amazon DSP campaigns for non-endemic advertisers can link a banner inside the marketplace to a destination outside of Amazon.
• External advertising can link directly into the marketplace to promote a product outside of the platform. This approach is emerging as a paid search strategy for Amazon-first
• Amazon DSP and Sponsored Display campaigns can retarget users outside of the Amazon platform to bring them back into the fold.
• Amazon Influencer partners is an affiliate program where influencers can enter into revenue share deals with merchants on the Amazon platform by promoting the products on their social media or websites and sending users into Amazon to purchase.

Linking in to the platform is still a nascent discipline made difficult by the somewhat rudimentary tracking made available via the affiliate platform or the Amazon Attribution platform.

Amazon Sponsored Product Ads are like AdWords

In our research for the Amazon Marketing Report, we found that Sponsored Products was the most popular product among marketers. It ressembles the Google Ads search product so much that it could have been named Amazon paid search, or even Amazon AdWords, now that Google has abandonned that name.

Amazon Sponsored Products is easy to use because it directly uses the product listing as the ad, targets keywords and even allows marketers to use automatic targeting for refining the keywords that drive conversion.

Amazon Sponsored Products is the first step a Seller will take into advertising, and in many cases it is a necessary step to increase visibility, once the product listings have been optimized and a brand store created.

Amazon DSP is gaining ground

In the world of programmatic advertising, Google DV360 is the incontested leader trailed by TheTradeDesk. The Amazon DSP is quite a bit lower on the list. It has a triple advantage, though: it provides the only access to inventory on the Amazon marketplace, its inventory is experiencing hefty growth, and it has some of the best audience data on purchasing behaviour. Expect to see the Amazon DSP gain more ground in the near future.

The learning center is great

With such a strong growth, a rapidly evolving platform, and a culture of confidentiality, it can be difficult to find reliable information about Amazon Advertising. Luckily, there is the Amazon Learning Console, a training and examination platform freely available and really well structured. In the learning center, anyone with a an account, some time and curiosity can obtain an Amazon Advertising Certification.

Don’t ignore things that grow at 30-70% growth rates.

No serious business person can ignore trends that represent 30-70% growth per annum, except if they are Bitcoin and suddenly drop at the same rates again. The Amazon platform and ecommerce grows continuously and Amazon Ads grows consistently above that rate catching up on other advertising platforms and gaining ground in the digital advertising triopoly.

It is time to figure out how marketplaces in general, Amazon and its advertising dimension in particular can affect your business area and pick up the challenge of competing there.

If you are aiming to build a more full understanding of Amazon marketing, you find a complete coverage in Innovell’s “Amazon Marketing Report”.

Google and Facebook had become so powerful in the digital advertising market that analysts called them the duopoly. But last year the strong entry of Amazon into the digital advertising space made them revise that name into the Triopoly. Those three players together represent some 66% of global advertising. This is calculated on the basis of projected numbers for global digital advertising and an estimate of Google’s revenues which will only be published in a couple of days.

Global digital advertising statistics can be found here: https://www.statista.com/outlook/216/100/digital-advertising/worldwide#market-revenue

Google represent the largest proportion with 60% of the triopoly in Q4’19 and Facebook represent 32%. Amazon Ads only represent 7,5% in Q4 2019. However, this is up from 5,6% for the full year 2018 and 3,3% for 2017.

With the recent release of Amazon’s Q4’19 results, it has become apparent that Amazon Ads is the strongest growing segment of Amazon’s revenue. Read more about this in this recent article on Amazon’s Growth Riders

Facebook also recently released their Q4 and full year 2019 earnings report and comparing with those, it also becomes clear that Amazon Ads is out-growing Facebook. We are still waiting for Google’s results to come out but looking at the Q1-Q3 growth, it seems likely that they are lagging even further behind.

Amazon playing catch-up

So how is Amazon Ads playing the game of catch-up in comparison with the other triopolists? We plotted the quarterly revenue of the triopolists against each other and calculated the share of Amazon Ads vs Triopoly, the share of Amazon Ads of Google Ads and the share of Amazon Ads out of Facebook Ads as you can see below:

Amazon Ads revenue was 23% of Facebook Ads revenue in Q4 of 2019. Growth in Q4 was 41% compared to Q4’18 where Facebook Ads “only” grew by 27% and Google Ads are estimated at around 17%.

With this game of catch-up, Amazon Ads is likely to represent 12,5% of Google Ads in Q4’19. Not something to ignore any longer and a justified place with the two other digital ad giants of this world.

Amazon Growth

It is fascinating to see the growth rates at which Amazon has been operating for the past year. A revenue growth rate of 30% for a company that big is exhilarating. That being said, it must be really hard to live up to expectations when you are so high up in the sky.

While we are really curious to see the 2019 Q4 results from Amazon published on 30 Jan 2020, we have been analyzing the data from the past couple of years, to understand the components of growth. Let’s start with some more general observations we have made:

• Amazon grows at a rate of 30%
  From 2016 to 2018, Amazon revenue grows a rate of around 30% per annum but the outlook is lower for 2019 (17-24% YoY in Q1-Q3)
• But Amazon Ecommerce growth is below the ecommerce market
  The Ecommerce activity of Amazon (own ecommerce sales + third party sellers in the marketplace) is growing at a rate of around 20% over the past couple of years but this is below the growth of global ecommerce which grew at rates over 23% in the same period
• And the revenue is diversifying
  Ecommerce and marketplace represented 84% of Amazon revenue in 2016 and is projected to go below 70% for 2019

In this analysis we have merged Amazon Ecommerce and 3rd party sellers into one category which we refer to as “Ecommerce and Marketplace”. The higher growth segment of the two is the marketplace but it does not come close to any of the Growth Riders that we are focusing on. In 2016, there was no revenue from Physical stores and Amazon Ads (this is accounted for as the “Other” category in Amazon quarterly reports) only represented 2%. In 2018, those 2 segments represented 12% of Amazon.

Amazon Web Services is a strong business segment. Already at 9% in 2016 it continues to grow faster than ecommerce and will likely reach 13% in 2019. (We are using projections for 2019 as we only have Q1-Q3 figures at the time of writing). And Prime (reported as subscription services) was already 5% in 2016 and steadily growing to probably 7% in 2019.

AWS

The well-known growth rider in the pack is AWS : Amazon Web Services. And AWS indeed representing 12-13% of Amazon revenue in 2019 and grew at a rate of 50% between 2016 and 2018. But growth has decreased in 2019 and may be end up being as « low » as 35% YoY in Q4. The segment is growing more mature, perhaps.

Physical Stores

Physical stores took at huge leap in 2017-2018 with store openings and now represent 6-7% of Amazon revenue. All the ecommerce activity related to the physical stores is counted as ecommerce revenue and already included in other growth figures and in Q1-Q3 of 2019 the pure physical store activity has not increased. This segments will likely grow in bumps, as Amazon open more stores.

Prime

Low let’s look at one of the really strong segments, namely Prime. Prime is Amazon’s loyalty program with same or next-day delivery which is changing the standard for ecommerce. It is also a Netflix and Spotify competitor and it has a penetration of over 50% of US Amazon users. Prime has experienced growth rates of 35-40% in 2019 but the growth trend has been downward. However, Amazon has invested heavily in Prime adoption in Q3 and Q4 and we may be in for a surprise in Q4 figures. Will they perhaps return above the 50% growth mark ?

Amazon Ads

The advertising segment has been one of our focal points in our research for the Amazon Marketing Report and Amazon Ads grew by over 100% between 2017 and 2018. The growth is expected to decrease and trends for Q1-Q3 point to between 35 and 45%. But Ads will have really strong Q4 and we project the year to come out at around the 45% mark. Even so, Q4 is a crazy quarter and  we could be in for a surprise here as well.

Crazy growth but maybe not insane growth in 2019

In summary, we are really in a crazy growth setting with consistent double-digit figures. All growth figures have been seen to slow down a bit for Amazon during the first 3 quarters of 2019 and maybe we will be looking at a scenario where even the strongest segments ONLY grow by under 50% compared to 2018.

Figures will be out on 30 January. We predicted the growth champion for 2019 to have been Amazon Ads, closely followed by Prime 🙂

Update 30 January 2020:

• Amazon Ads (Other revenue) did come out as the top growth rider but “only” at a 39% growth.
• Second was AWS at 37% growth representing 12% of Amazon’s earnings
• In third position came Prime (subscription services) at 36%
• As expected the Physical stores didn’t grow but it is important to remember that online sales picked up in those stores is not included in that line. They are reported as “ecommerce”
• Overall Amazon earnings grew by 20% in 2019

This article is written on the basis of the research we are doing for the Amazon Marketing Report but is not an extract from the report. The report is scheduled to launch on 20 February 2020. Subscribers to the Innovell “Report Alert” newsletter will get a chance to obtain the report for free.