Finding the most effective platforms to maximize the return on investment (ROI) is an instant tough call for any e-commerce business. Two giants in the advertising arena, Amazon and Google, often vie for the attention of advertisers. In this blog post, we’ll delve deep into the comparison between Amazon Advertising and Google Ads, unveiling the true ROI behind each platform.

The Trade-Offs of Amazon Advertising

Amazon’s Pay-Per-Click (PPC) advertising platform has gained a reputation for being cost-effective. However, there’s a catch. 

The allure of Amazon Ads lies in its ability to drive conversions at a lower CPA. Some stores often report that their advertising dollars go further on Amazon, with some claiming tangible decreases in CPAs. This perception of cost efficiency may seem like a compelling reason for businesses to consider Amazon as a viable advertising channel.

At the same time, the cost-effectiveness of Amazon Advertising must be examined through a more comprehensive lens. One critical factor to consider is Amazon’s margins. Amazon typically charges a fee that amounts to around 25% of Gross Sales, including Value-Added Tax (VAT). This margin is associated with the fulfilment and logistics services provided by Amazon, which can impact the overall profitability of advertising campaigns on the platform. And if you roll in, Amazon Ads costs many business owners are paying a hefty 50% margin to Amazon. 

To determine the true return on investment (ROI) of Amazon Ads campaigns, you should weigh the lower CPA against Amazon’s margin. While a lower CPA can reduce the cost of acquiring customers, the margin impact can eat into the profit margins of the products being sold.

Ultimately, the goal of advertising is not just to acquire customers at a lower cost but also to generate profitable revenue. You should assess the impact of Amazon’s margin on your specific product offerings and pricing strategies. It’s essential to strike a balance between cost-efficient customer acquisition and maintaining healthy profit margins.

For some businesses, diversification may be a strategic approach to mitigate the trade-offs associated with Amazon Advertising. This could involve: 

• allocating a portion of the advertising budget to Amazon
• exploring other advertising channels, such as Google Ads or social media advertising, to diversify the customer acquisition landscape.

While cost-efficient customer acquisition is a significant advantage, profitability remains the ultimate benchmark for the success of advertising efforts on Amazon.

The Dilemma of Big DTC Brands

Direct-to-consumer (DTC) brands have transformed the way products are brought to market, offering consumers a direct and personalized shopping experience. However, when it comes to expanding their reach through digital advertising, DTC brands often grapple with a significant dilemma—whether to embrace Amazon Advertising or Google Ads. This decision hinges on a crucial factor: ROI.

Many DTC brands initially hesitate to dive into the Amazon ecosystem, and it’s not without reason. Again, the primary concern often revolves around margins. 

However, to make an informed decision, it’s imperative to look beyond the surface and take a holistic view of costs and benefits. Are DTC brands factoring in all their expenditures when assessing the true ROI of both platforms? Here’s what you should consider.

• Website maintenance. Running an e-commerce website involves costs related to web development, hosting, security, and regular updates. These expenses can accumulate significantly over time.
• Fulfillment costs. While DTC brands may be concerned about Amazon’s fulfilment fees, it’s essential to compare them to the costs of running an in-house fulfilment operation. From warehousing and staff to packaging and shipping, in-house fulfilment can be a substantial financial commitment.
• Sales and advertising costs. DTC brands invest in sales and marketing efforts to drive traffic to their websites. These costs include advertising on various platforms like Google Ads, content creation, and marketing campaigns. When evaluating ROI, it’s vital to consider how these expenses compare between Amazon and Google.

To determine the genuine ROI of both Amazon and Google advertising, DTC brands should conduct a comprehensive analysis that considers all these factors. This analysis will help you gain clarity on the overall profitability of each platform and make strategic decisions aligned with your business goals. 

The decision to embrace Amazon Advertising or Google Ads should be based on a thorough understanding of all costs and benefits. While Amazon may present margin challenges, its vast customer base and data-rich environment can offer unique opportunities. 

Google, on the other hand, provides powerful advertising tools to reach a broad audience. Ultimately, a well-informed decision will enable DTC brands to leverage both platforms effectively and drive growth in the competitive e-commerce landscape.

Amazon’s Data Advantage

When it comes to passing back data to sellers, Amazon outshines other retail platforms like eBay or AliExpress. This data-rich approach provides valuable insights for brands and retailers.

Amazon’s vast and diverse ecosystem serves as a treasure trove of data, encompassing millions of customers and a myriad of products. This abundance of data allows Amazon to offer a wealth of information to advertisers, helping them understand customer behavior, preferences, and buying patterns.

For brands and retailers, access to such data insights is invaluable. It allows them to make informed decisions, optimize their advertising strategies, and ultimately drive higher returns on investment (ROI).

However, while Amazon’s data advantage is undeniably powerful, there’s a caveat that advertisers must contend with. There’s the manual process of gathering and utilizing this data, especially when redirecting traffic from external sources like Google to Amazon.

• Manually stitching sales data. One of the primary challenges lies in understanding Return on Ad Spend (ROAS) in scenarios where traffic is redirected from Google to Amazon. To achieve this, advertisers often find themselves in the arduous task of manually stitching together sales data with ad bids. This process involves matching the data from Google Ads campaigns with the corresponding sales data on Amazon.
• Time-consuming task. Manually stitching data is a time-consuming endeavor that can be prone to errors. Advertisers must meticulously match each sale to the specific ad campaign that led to it. Additionally, as the volume of data increases, so does the complexity and duration of this task.

To overcome the challenges associated with manual data stitching, online stores are turning to advanced attribution tools and platforms. These tools automate the process of connecting ad spend to sales data, providing accurate ROAS insights in real time.

The Attribution Challenge

One of the significant challenges in assessing the true ROI between Amazon and Google lies in attribution. Brands often struggle to attribute conversions accurately, especially when customers journey from Google to Amazon. This attribution piece is crucial for making data-driven decisions and optimizing campaigns effectively. Here’s what makes the attribution challenge complex.

• The complex customer journey. Today, customers engage with brands and products in various ways, both online and offline, before buying something. They might find a product through Google, learn more about it on Amazon, and then decide to buy it. This complexity in the customer journey makes it difficult to determine which advertising efforts led to a sale.
• Attribution models. Attribution models are used to assign value to different touchpoints along the customer journey. These models range from first-click attribution (giving all credit to the first touchpoint) to last-click attribution (attributing the conversion solely to the last touchpoint). In between, there are multi-touch attribution models that distribute credit across various touchpoints.
• Google-to-Amazon transition. One of the key challenges in assessing the ROI between Amazon and Google lies in the transition from one platform to another. For example, a customer might start their journey by clicking on a Google Ad, but ultimately make the purchase on Amazon. This cross-platform journey muddles the waters when it comes to determining which platform deserves credit for the conversion.

Accurate attribution is not just a matter of assigning credit; it’s the foundation for making data-driven decisions and optimizing advertising campaigns effectively. Without a clear understanding of which touchpoints are most influential in driving conversions, advertisers risk misallocating their budgets, resulting in suboptimal ROI.

To solve the problem of figuring out the true return on investment (ROI) of advertising on Amazon and Google, online businesses are using advanced tools and methods for attribution. These tools consider the entire customer journey and analyze data from different points of contact to give a more accurate and complete understanding of how conversions happen.

Attribution will remain a dynamic and evolving field. You will need to adapt to new technologies and methodologies to stay ahead of the curve. The shift toward privacy-conscious practices and changes in tracking methods will further influence how attribution is approached. Accurate attribution is the key to unlocking the full potential of digital advertising in an increasingly competitive landscape.

The Role of BrightBridge

BrightBridge is BrightBid’s solution designed to bridge the gap and simplify the attribution puzzle between Amazon and Google Shopping ads. BrightBridge offers an attribution model that connects Amazon to Google via AI-driven bid optimization and takes potential customers directly from Google Shopping ads to your Amazon store—something, which was impossible before. As a result, you can implement attribution seamlessly and get customers within a single Software as a Service (SaaS) platform—BrightBid. 

BrightBridge can help you unlock the true potential of their advertising efforts on both Amazon and Google. Here are the key benefits of BrighBridge for Amazon sellers.

• AI-driven bid optimization. It goes beyond just connecting two advertising giants. It uses AI technology to improve the efficiency and effectiveness of advertising campaigns. By analyzing various data points like user behavior and campaign performance, AI algorithms optimize bid strategies. The outcome is better ad placement, lower costs, and increased ROI for advertisers on both Amazon and Google platforms.
• Seamless implementation with SaaS convenience. One of the standout features of BrightBridge is its seamless integration within BrightBid—a single Software as a Service (SaaS) platform for AI-powered Google Ads optimization, with a seamless Amazon integration. You no longer need to grapple with complex, disjointed systems to manage your Amazon and Google advertising efforts. BrightBridge consolidates the attribution process, making it accessible and actionable from a single interface. This not only saves time but also streamlines the decision-making process.

For any Amazon store owner, mastering attribution is crucial. BrightBridge offers an API and AI-driven bid optimization that simplifies this task: you can connect Amazon and Google on one platform, improving campaign understanding and ROI.

The Value of Testing and Measurement

To truly understand the effectiveness of advertising on Google and Amazon, it is crucial to create a thorough test plan. You need to gain valuable insights into the actual return on their ad investment. Here’s why testing is important.

• The role of testing. Testing is the cornerstone of effective advertising. It involves creating controlled experiments to evaluate different strategies, ad formats, targeting options, and messaging. These experiments, often referred to as A/B tests, enable advertisers to assess what works best for their specific audience and objectives.
• Comprehensive test plans. To unveil the true ROI of advertising on Google and Amazon, you must establish comprehensive test plans that encompass various aspects of your campaigns. These plans may include:
  • Ad creatives. Testing different ad creatives, images, and copy to determine which resonates most with the target audience.
  • Audience segmentation. Experimenting with different audience segments to identify the most responsive and valuable groups.
  • Bidding strategies. Evaluating various bidding strategies, such as manual bidding versus automated bidding, to optimize cost-efficiency.
  • Keyword selection. Testing the performance of different keywords to refine the selection and maximize ad visibility.
  • Ad formats. Assessing the effectiveness of different ad formats, such as text ads, display ads, or video ads, based on campaign objectives.
  • Landing pages. Conducting tests on landing page design and content to improve conversion rates.
• The power of advanced attribution. Accurate measurement is crucial for effective testing. Basic metrics such as click-through rates (CTR) and conversion rates provide important insights, but advanced attribution methods provide a more comprehensive understanding of campaign performance. These methods consider the entire customer journey and track interactions across various touchpoints.
• Unveiling the real return on ad spend (ROAS). The ultimate goal of testing and measurement is to unveil the real Return on Ad Spend (ROAS). ROAS is a crucial metric that assesses the revenue generated for every dollar spent on advertising. Combine advanced attribution with meticulous testing to gain insights into which ad strategies drive the most revenue and profit.
• Informed decision-making. Having accurate data and insights helps you make informed decisions about where to spend your budget, which strategies to expand, and which ones to improve or get rid of. This data-driven approach removes the need for guessing and makes advertising spending more efficient.
• Confidence in expansion. Testing and measuring can help you improve youadvertising strategies. By knowing what works and what doesn’t, you can confidently invest in campaigns that will give positive results.

It’s important to know if your ads on Google and Amazon are making you money. This can be hard to figure out, but it’s necessary. A good test plan helps you see how much money you’re making and how to do better in the future. If you focus on testing and measuring, you’ll be more successful in digital advertising.

Conclusion

In summary, figuring out the actual return on investment (ROI) of Amazon Advertising and Google Ads is a complex task. Amazon has lower costs and provides valuable data, but accurately measuring the impact and ROI is difficult. Tools like BrightBridge can help simplify this process. 

Ultimately, you need to consider the pros and cons, factor in all expenses, and use advanced attribution strategies to determine the true ROI. This will enable you to make informed decisions based on data and succeed in the competitive digital advertising industry.