The Prime Day 2021 numbers are still rolling in, but it looks like yet another record-breaking year for Amazon in terms of total sales. The event is estimated to generate $6.8 billion in gross sales, an increase of 9% YoY. Since Prime Day 2020 was shifted to Q4, it made estimating volume increases and overall performance this year a tad more difficult.
For advertisers, Prime Day was likely a bit of a mixed bag, still seeing the exponential volume increases but competition also jumped significantly this year, which may have driven down ROAS (compared to prior years). Ad spend on Amazon Sponsored Search specifically was estimated to have increased by over 50% this year, which explains the inverse relationship of increased competition and abated ROAS*. Performance for our clients was still strong with revenue up YoY in many cases but ROAS did struggle when compared to prior years.
In Prime Days past, many of our client accounts would see profitability improve as conversion rates increased alongside ROAS. These shifts in shopping behavior would offset CPC increases caused by competitors pushing up bids and increased investment across advertisers. This year, CPCs increased as expected but conversion rates only improved slightly. This trend is likely due to consumers showing increased focus on deals and even searching for better deals both on Amazon and on the other big retailers like Walmart or Target. Last year’s Prime Day conversion rates could have also been inflated due to the proximity to holiday.
*Based on Amazon Sponsored Search only.
Prime Day 2020 vs. Prime Day 2021
- CPCs increased by an average of 60%
- Conversion Rates decreased by 10%
- More competition, higher minimum bids
- Shoppers focus on deals, smaller basket sizes
A pain point for many brands was the lack of organic presence for non-deal products. Many smaller brands were unable to execute these deals as Amazon did not confirm Prime dates until June 2nd, only leaving a few weeks to build up inventory and plan accordingly. The search engine results page (SERP) on Amazon during Prime Day has always changed with non-deal listings taking a back seat to discounted items. Additionally, Amazon Live Video stream and custom content took up most of the space above the fold. The push for Amazon-owned products like the Amazon Fire Stick 4K and Fire TVs was also more prevalent this year. These factors elbowed out opportunities for organic presence of products slightly not offering big discounts during Prime Day.
These shifts clearly improve performance for companies that run Prime Day Exclusive Discounts, Deals of the Day and Lightning Deal products, which benefit greatly via the halo effect of shoppers being pulled into the funnel. Below we compare the performance of products running and not running deals on Amazon Search. The performance is based on Prime Day(s) compared to the Monday and Tuesday the week prior.
Discount and deal SKU performance
- Impression volume increased by +400%
- CTRs increased by +23%
- CPCs increased by +40%
- Conversion Rates increased by +30%
Non-deal SKU performance
- Impression volume increased by +250%
- CTRs decreased by -18%
- CPCs increased by +50%
- Conversion rates +18%
Prepping for the Next Prime Day
These results demonstrate the focus on deals this year, with these products seeing much higher volume increases compared to products not running any discounts. The click-through rates showcase this further as “deal SKUs” saw CTRs increase by nearly a quarter while SKUs not running deals saw CTRs drop heavily.
As competition continues to increase on Amazon among sellers and advertisers, a strategic approach to Prime Day will become more essential. Advertising costs on Amazon will likely continue to increase as will the organic focus on deals and the number of sellers running deals. Brands that execute promotions strategically on Prime Day and find a way to leverage the halo effect of these promotions are more likely to see true growth in coming years.