PPC History and Trends with Bobsled Marketing

Today class, I want to go into the history of PPC ads and the trends of tomorrow. Apart from being a PPC master, did you know I’m also a brilliant historian and modern PPC philosopher? I’m not very modest, but you already knew that.

We also have another PPC wizard contributing to the discussion today. Kiri Masters, founder of Bobsled Marketing answered some questions regarding the future of PPC.

A Brief History of PPC Advertising

Let’s go back to 1996. Bill Clinton is president, the members of Oasis didn’t hate each other, Michael Jordan won his fourth NBA championship with the Chicago Bulls, and most important to the history of PPC: Yahoo makes its first IPO. Yahoo became the top ad-supported website and generated $53.2 million in advertising in 1997, making the company a major player in the online advertising space.

Image showing the 1996 homepage of Yahoo.
Here’s what Yahoo’s homepage looked like in 1996. Yahoo had multiple chances to buy Google. One in 1997, where Yahoo turned down an offer to buy Google for $1 million when Google’s founders were trying to get financial backing. Another missed opportunity was in 2002, when Google’s price was $5 billion. What could’ve been, huh?

In 1998, Jeffrey Brewer, a founder of GoTo.com, presented the idea of PPC in a TED Conference, but the idea for PPC ultimately was credited to Bill Gross. The same year, GoTo.com established a PPC auction system to bid on ad position using keywords and soon users were paying up to a dollar per click. In 2001, GoTo.com changed their name to Overture and were bought by big players in the online advertising space: Yahoo. Overture earned $228 million in PPC ad revenue in 2001 and was sitting on the top of the PPC world until Google came along.

Image showing early Adword PPC ads.
We’ve come a long way, haven’t we? (Image provided by SEMrush).

In 2000, Google launched AdWords, a system where advertisers bid on keywords and pay when their ad is shown. In 2002, Google added their PPC system to their search results, using ad relevance to rank ads. Skip to 2004, Google’s market share hits 84.7 percent, mostly from PPC advertising. Since the creation of PPC, Google has improved its relevance score, social media sites like Twitter, Facebook, LinkedIn and more have established PPC systems and software has been created to automate the PPC process (like Ad Badger).

Current Trends in Amazon PPC

As you can tell, PPC advertising has come a long way to the modern systems in place today. Amazon has allowed sellers and vendors to advertise their products on Amazon since 2012, making it a fairly young system in the timeline of PPC. As you should know by now, Amazon is the largest e-retailer in the U.S., making it a great platform for PPC ads to pillage and plunder.

Kiri Masters said, “I would say that brands are finally realizing the importance of PPC on Amazon. Many are shifting budget to this platform in favor of other PPC platforms like Facebook and Google. An analyst from Atlantic Equities predicts that Amazon will quadruple their revenue from advertising by 2020.”

Here are some current trends in the PPC space to take note of:

Online Shopping is Big

I gathered some stats to prove it:

  • According to BigCommerce, 51 percent of Americans prefer to shop online and 80 percent of Americans with internet access made an online purchase in the last month.
  • UPS says, 4 out of 10 purchases were made using only an online channel for searching and buying.
  • Smart Insights found that 40 percent of US males aged 18-34 say they would ‘ideally buy everything online, compared to 33 percent of females in the same age bracket.
  • nChannel reported Americans spend 64% of their shopping budget in-store, and 36% online.

Amazon is expected to make $196.8 billion in 2017 and dominate 43.5 percent of total e-commerce sales.

Chart showing Amazon's predicted market share in e-commerce sales.
Amazon will own about 44 cents out of every e-commerce dollar spent in the U.S. according to new estimates by eMarketer.

 

Buyers Want the Best Ads, Product Pages, and Shipping Costs

This isn’t really a secret, but customers want it all. They want the coolest products for the cheapest price and an overall good time buying it. Well, here are some stats related what customers want sellers to provide for them on Amazon from BigCommerce:

  • “The top three factors that are very or extremely influential in determining where Americans shop are price (87%), shipping cost and speed (80%) and discount offers (71%).”
  • “Online shoppers want products to be brought to life with images (78%) and product reviews (69%).”
  • “78% of online shoppers want more images from e-commerce sites.”
  • “69% of online shoppers want more reviews from e-commerce sites.”

Audience Data and Conversion Tracking

Now that we can effectively track consumer data, it has become increasingly easy to know how to advertise to audiences. Using analytics platforms, like heavy-hitters Google Analytics and Adobe, allows conversion tracking, tracking by marketing channel, and much more. Having this data makes displaying relevant ads and knowing which keywords to bid on much easier. MarketingLand discusses how to get the most out of your data.

With Amazon Advertising Platform, vendors can “connect with their customers” to see where they shop, watch videos, and consume information. Amazon also provides Advertiser Audiences to optimize your ad campaigns by segmenting audience types.

The Future of Amazon PPC

Amazon PPC Ads Appearing at Every Stage of the Buyer’s Journey Will Become Normalized

Earlier this year, Amazon released an API for self-serving ads within Amazon Marketing Services that will allow it to compete with the likes of Google and Facebook. Ad Badger expects to have AMS capabilities as soon as 2018. This increases the capability of taking some of the market share of PPC advertising and branching out to multiple touch points in the buyer journey, instead of just at the end of it.

“Currently, PPC on Amazon relates to the bottom section of the customer buyer journey: Evaluation and Purchase. Amazon will eventually give brands more options to advertise across their display network (currently available only to large advertisers through their Amazon Media Group program), and provide other formats to build brand awareness,” says Kiri. “Secondly, the path to purchase on Amazon is much shorter. A customer may see an ad, click on it, and complete the purchase on Amazon. On other platforms, there may be many more steps involved. Amazon, with its excellent fulfillment infrastructure, gives customers the confidence to place their order right away.”

Amazon Media Group (AMG) is a way to allow gigantic brands to advertise to potential customers, not on Amazon’s e-commerce store. Meaning, if someone is on another Amazon site (Amazon Prime Instant Video, Kindle, Fire TV, etc.) or even a third-party site (IMDb), they can still be advertised to through desktop display ads, product display ads, mobile banner ads, or video ads that drive traffic to product pages.

A collection of Amazon-owned websites.
This is some of the Amazon-owned sites where you could see PPC ads. (Image provided by Digital Inspiration)

AMG is only available to vendors with a minimum investment of $35,000 – $50,000, but will the price go down as the demand for these ads increases? Only time will tell.

When Will Alexa Start Advertising?

The Amazon Echo broke onto the scene in November 2014 and advanced voice-search technology. There have been audio advertisements since the early days of radio, but how do they relate to PPC and how will Amazon turn voice advertisements into profit?

Kiri Masters says, “Currently, Alexa can re-order past purchases or order from a small selection of products called “Amazon’s Choice” which is designated by having a popular product with a high sales volume. I wonder what voice commerce advertising will be called. It won’t be PPC since there’s no ‘click’!”

Here’s how placing orders with Alexa work currently, but I predict Alexa will start recommending relevant products when searching for things like “Best ways to make cold brew coffee” or “What movies are in theater right now?”. At the very least, Amazon will offer a premium ad-free service for Alexa users to make some extra pocket change.

Image of Amazon Echo
Alexa, who’s the fairest, most handsome, and fiercest badger of them all?

 

Geotargeting

BigCommerce also states 25 percent of online shoppers have made an online purchase from a brick-and-mortar store. Geotargeting, is a great way to target a potential customer with PPC ads in a specific location. With geotargeting, businesses can make the most of their limited advertising spend and increase their chances of converting. Here is an article by WordStream discussing geotargeting with PPC ads.

I predict Amazon will add a local PPC feature if they truly want to compete with AdWords and Facebook. Amazon Prime Now offers 2-hour delivery to specific zip codes. It would make sense to offer geotargeting features so Amazon sellers can create audience segments.

Amazon ads have a history of taking features from Adwords. Features like broad, phrase, exact matches, negative keywords, and their own version of Quality Score are all taken from Adwords.

Conclusion

The full story of Amazon PPC is still unwritten. Could it become the greatest PPC platform there ever was? Can Alexa invade the thoughts of customers to make your ads more relevant? Will Jeff Bezos finally answer my texts about the future of Amazon? Only time will tell.

Until next time. Badger out.

 

About Kiri Masters:

Kiri is a former commercial banker at JPMorgan Chase, and founded the digital agency Bobsled Marketing in 2015 to help consumer product brands to grow their sales on Amazon.

Kiri is the author of ‘The Amazon Expansion Plan’, a featured contributor on the RetailWire panel of retail experts, and the winner of a Silver Stevie® Award for Young Female Entrepreneur of the Year.

Prior to founding Bobsled Marketing, Kiri built her e-commerce skills firsthand through launching a niche craft supplies brand on Amazon. She enjoys sharing her expertise as co-host of the new Ecommerce Brain Trust podcast (along with Julie Spear) and with regular commentary on current events on the Bobsled Marketing blog and retail industry press.

Short-legged Amazon PPC expert. Furry ad-campaign master. Don’t call me cute.

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