Lafayette – Circa February 2018: Amazon Store at Purdue. A brick-and-mortar store customers can … [+]
Early data from the 2024 Black Friday shopping event reveals intensifying competition among brands advertising on Amazon, with overall ad spending jumping nearly 30% compared to 2023 as companies vie for consumer attention during the critical holiday shopping period.
The preliminary data from e-commerce ad platform Pacvue shows the cost-per-click (CPC) for Amazon ads increased 9.9% compared to Black Friday 2023, reaching $1.89. This rise in advertising costs comes as brands face growing pressure to maintain visibility during major shopping events.
Pacvue has been tracking key advertising metrics on Amazon and has tracked increasing Cost Per Click … [+]
Efficiency Metrics Show Signs of Strain
The increased investment in advertising doesn’t necessarily translate to better performance. Click-through rates declined 7% compared to last year’s Black Friday, suggesting that while brands are spending more, they may be getting less bang for their buck.
“The challenge of ad efficiency is a sign of a maturing ecosystem,” notes Pacvue in their analysis. “It’s important for brands to set expectations when running campaigns this year vs. five years ago.”
Premium Ad Formats Show Promise
One bright spot emerged in Amazon’s Sponsored Brands format, which achieved a 6.5% year-over-year increase in click-through rate despite the overall decline in engagement metrics. These premium placements, which feature brand logos and multiple products, commanded higher prices with an average CPC of $2.55 compared to $1.80 for standard Sponsored Products ads.
Data from ad-tech provider Pacvue shows preliminary Black Friday performance for advertisers on … [+]
Shift Toward Upper-Funnel Investment
Perhaps most notably, investment in Amazon’s DSP (Demand-Side Platform) advertising increased 28% compared to Black Friday 2023. This surge in upper-funnel advertising spending represents a significant shift in strategy – as I recently wrote in a post for , over 71% of retail media spending typically occurs in lower-funnel ads like sponsored products. The Black Friday data suggests brands may be rethinking this allocation as they look to influence consumers earlier in their shopping journey.
This shift toward brand awareness campaigns suggests Amazon is successfully positioning itself as more than just a lower-funnel conversion platform. The trend parallels broader changes in Amazon’s advertising ecosystem, including recent moves to democratize access to sophisticated advertising tools that were previously restricted to larger brands.
Strategic Implications for Brands
Commenting on the data via LinkedIn, Melissa Burdick, President of Pacvue, offered several strategic recommendations for brands. “Retail media is coming full circle from performance marketing to brand marketing,” she noted. “By reaching shoppers at the top of the funnel, they’re more likely to search for your brand at the bottom.”
Burdick also emphasized the importance of diversification and measurement, advising brands to explore other retail media networks and pay close attention to incremental return on ad spend (iROAS). “We’ve seen different ROAS performance for Walmart Connect and Instacart, depending on your audience, and the creative formats and different shopper segments can have a powerful effect on performance,” she explained.
The rise in advertising costs is particularly notable given Amazon’s recent push into ultra-low-cost shopping with its new Haul store, which I covered recently in a post for . As sellers face increasing promotional costs to maintain visibility, it could create additional challenges for Amazon’s strategy to compete with Chinese marketplaces on price.
Looking ahead
Looking ahead, these early Black Friday results point to an increasingly complex advertising landscape on Amazon. While the platform’s success in driving upper-funnel investment through DSP is evident, the combination of rising costs and declining efficiency metrics creates a challenging environment for brands.
Those who can successfully balance their investment across the full marketing funnel – using DSP for awareness while optimizing their sponsored ads spend – will likely see the strongest performance this holiday season. But many brands, especially smaller sellers, may struggle to maintain visibility as costs continue to rise.
