Episode 141

Prime Day + Early Holiday Insights

Chris Tyler - OMG Commerce
November 18, 2020
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Very little about 2020 has been normal - including Prime Day.  This year’s Prime Day was in October vs. Amazon’s usual July time frame.  What did this mean for 2020 Prime Day vs. 2019 Prime Day?  Would this year’s Prime Day mark the official launch of holiday sales? 

In this episode, I bring back OMG Commerce’s Amazon Director Chris Tyler to discuss what we noticed this year during Prime Day with our clients. 

Here’s a look  what we discuss:

  • Total prime day sales grew 70% year-over-year in 2019 vs. 2018, but only grew 45% year-over-year in 2020 compared to 2019 (Statista report).  
  • $3.5 billion of the estimated $10 billion in total sales on Prime Day were from 3rd party sellers, but the most popular item on Prime Day was Amazon’s deeply discounted Echo Dot.  
  • What categories of products we saw perform the best for our OMG clients. 62% of Prime Day purchases this year were for gifts for someone else according to Digital Commerce 360.  
  • Why we didn’t see as dramatic of a list for 2020 Prime Day vs. 2019 Prime Day, but sales immediately after prime day this year have been strong.
  • The impact of Prime Day on Sponsored Brand Video Ads and overall ad performance
  • Interesting Amazon DSP trends during Prime Day and since
  • Plus more!

Mentioned in this Interview:

eMarketer Amazon Prime Day
Statista Amazon Prime Day

Sponsored Brands Video Ads

eE 132 with Chris Tyler


Chris Tyler - Director of Amazon Advertising Services at OMG Commerce

Via LinkedIn



Episode Transcript

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And this is a special edition. This is a special show coming to you mid fourth-quarter or almost mid fourth-quarter. Going to do a breakdown of Prime Day performance and get a little sneak peek at what we are expecting for the rest of the holiday shopping season.

Brett:

With me on the podcast is the man, the myth, the legend, this is now, is this your third time to be on the podcast? The third or fourth?

Chris:

Yeah.

Brett:

Excited to welcome on, the Amazon Director for OMG Commerce, Mr. Chris Tyler. Chris, what's going on, man? Is this really the third show or fourth?

Chris:

Yeah, this is the third. I was going to ask you, who's been on the most, is it Chris Brewer?

Brett:

Chris Brewer, I think, has been on the most. So for those that don't know, and I think most of you do, Chris Brewer is the co-founder of OMG Commerce and my business partner. I think he's been on four, but man, you're moving in there dude.

Chris:

Catching up.

Brett:

And if you catch up, it's anybody's ballgame, so we'll see.

Chris:

I appreciate you having me back.

Brett:

Yeah, absolutely. So, you head up our Amazon team, we've got a team of eight or nine now, at OMG Commerce, that's all they focus on, is Amazon and growing client's presence on Amazon, Amazon ads. So we're going to do a breakdown of what we saw with Prime Day this year and we're going to talk about some global stats as well, that are really interesting. And I think this will do a couple of things. One, it'll show that this was a unique year because this was the first time ever, that Prime Day was in October instead of July. So usually Amazon uses this as a way to really boost what's typically, a kind of a lousy time for e-commerce, summertime. They use Prime Day to really boost that timeframe, but this year, because of lockdowns and the pandemic, they had to wait until October. So this really served as the kickoff for holiday shopping.

Brett:

But first, I want to talk through Prime Day by the numbers and talk about how it's evolved in recent years. And then we'll get into a few global specifics, but then some specifics that we saw as OMG Commerce. So for those that don't know, Prime Day kicked off in 2015 and actually, I don't even know if you know this Chris, you probably do, it was to celebrate the 20th anniversary of amazon.com. Did you know that?

Chris:

I didn't, no.

Brett:

Oh, yes. Dump the Amazon director. So that first year, and again, it was in July or summertime anyway, 0.9 billion, so just shy of $1 billion in sales, pretty impressive. Next year, 2016, $1.5 billion, 2017, 2.4 billion, 2018, 4.19 billion, and then really, where there's the biggest jump, and we can talk about this for a second, 2018 at 4.19 billion for the Prime Day. And Prime Day also started getting longer, right? It grown now, it's a full 48 hours. So 2018, 4.19 billion, 2019 7.16 billion. So about a 70% year-over-year increase in total Prime Day sales, from 2018 to 2019.

Brett:

Now this year was huge too. So this year came in at about 10.4 billion. That's about a 45% year-over-year growth, still astronomical, but not quite the same growth pace that we saw from 2018 to 2019. Now a couple of caveats, because you may Google this, and you may look and you may see different numbers. Amazon doesn't actually reveal full sales totals for Prime Day. They're not required to do that by the SEC, so they'll reveal some data and obviously, they have to do their quarterly earnings and total quarterly results, but they don't reveal all of the numbers for Prime Day, so some of these are estimates.

Brett:

You have places like e-Marketer and Statista, that go in and they break down what is given, the data that is given, and then what we know about Amazon and then they extrapolate the rest. But we didn't see quite the growth from 2019 to 2020, like we were expecting. What do you say about that, Chris? Did you just notice anything with our clients that may also kind of indicate that yeah, we kind of saw the same thing? It was great, but maybe not the same kind of explosion that we saw in 2019?

Chris:

Yeah, to your point, we saw really solid growth in looking at week-over-week, looking at the Prime Day versus maybe the daily average of the two weeks prior. I believe we were a little over two X for both ad sales and total sales. But when we look at the growth we saw from 2018 to 2019, we were pretty far off, at least relative to where maybe, we were hoping starting Q4, maybe jumped that 70%, 80% increase that we saw the year prior. So it's weird to look at it because it's a crazy year, right? Nothing is the norm and so I think overall, it's a solid success, especially with the fact that Prime Day almost didn't happen, or at least, we didn't know if it would.

Brett:

Yeah, things were touch and go there. We were talking to our Amazon reps and they didn't know, nobody knew, right? The system was already so stressed and you remember back to the lockdowns and stuff, Amazon could not fulfill. And so we kind of wonder like, "Okay, are they going to have the confidence to run Prime Day and put extra pressure, extra stress on a system that's pretty well maxed, in terms of the supply chain and e-commerce delivery networks and stuff." But yeah, so we're lucky that it happened.

Brett:

So yeah, and what's also interesting is that, and you mentioned, nothing's really normal this year and that's so true. We had clients seeing absolute record days, every day, back in April and May in some categories. And that has continued to some degree, although, not at the same levels, but as we're looking at, watching that comparison, you talked about comparing Prime Day to the daily average for the two weeks prior to Prime Day.

Brett:

It kind of makes sense that we didn't see quite as much of a jump in 2020, because 2020 was already elevated a little bit, right? Where maybe the two weeks prior to a July Prime Day, those are pretty soft weeks, right? So you throw in a Prime Day, it's just going to be an explosion. And so we didn't really know what to expect this year, because Prime Day's never been in Q4 and we've never managed it during a global pandemic, either.

Brett:

So overall really good, but yet not the same spike that we saw either. What's also interesting and I wonder if this sparks any thoughts from your perspective. 62% of shoppers, this Prime Day, said they were shopping for holiday gifts, where if you look at Prime Day typically, it's in July, it's usually not gifts. It's usually like, "Dude, I'm going to get a special on a TV for my house or the Amazon Echos are on a massive sale."

Brett:

And those are actually, just a quick side note, the Echo Dot, the new Echo Dot was the most popular item for this Prime Day in 2020. That's what sold the most, and that's been kind of the trend for the last few years. It's Amazon's products, that one, they deeply discount them, they also promote them heavily, those have been the most popular products. But, did you see anything in our data that would indicate, yeah, this makes sense, they're more people shopping for gifts, this Prime Day, then maybe last Prime Day?

Chris:

Yeah. So we found that a good amount were gift based, but a larger amount were based off of product you would get with COVID, again, teaching supplies, baking supplies, anything that was home-based or otherwise, where the things that really picked up. And I would say, we do have a client that is in the gift giving to a certain extent, picture frames, photo albums, they saw an uptick, but not nearly the same that they saw in the last Prime Day. So to your point, I think that happened, but there were times, where it was actually the inverse, where we expected it to be the catalyst for the holiday season, and it did grow, again, it grew like two X, but not at the same level we saw in July of last year.

Chris:

So one of the things we're doing, is tracking the weekly after Prime Day, just because we know, "Okay, we're going to come up to Black Friday, we're going to have clients asking, why are things dipping prior to the holidays? What are we expecting?" And so we want to trend that out and on a side note, just one interesting thing we noticed was, the week after Prime Day, it was up sales, ad sales, total sales, impressions, 10% to 20% versus the two week prior to Prime Day. We know the week prior to Prime Day is going to be down. So we just-

Brett:

Right. The week prior to Prime Day, let me add, just to clarify this, the same thing happens before the Cyber Five. So before Black Friday, Cyber Monday, people wait, right? People wait and say, "Man, if I just hold on a few more days, I'm going to get all these deals." So the week before Prime Day, not so good, week before Black Friday, Cyber Monday, not so good. But what you're saying is, the week after Prime Day, and usually, they just drop off right after too, the week after Prime Day, this year, was still up 10%, 20% over the weeks prior, which is impressive.

Chris:

... yeah, really interesting and then the hope there is, it is the start of the holiday season. And hopefully, it puts it in a place, where that growth is more than last year. And like you said, it's hard to tell because we're already up so much. So what is that growth going to look like? And that's why we're kind of tracking the weekly post Prime Day. Prime Day was great. Wasn't as high as maybe people hoped, but it was still very high. And so now, our focus is moving to, what does the holiday season going to play out to be?

Brett:

Yeah, it is interesting. And one of the other things that Amazon did say, is that marketplace sellers, so third-party sellers, that's typically who we work with, they accounted for about 3.5 billion in sales, this Prime Day. And so it's a decent chunk of Prime Day sales, but it's only about 38% or thereabouts, of total Prime Day sales, where typically, just an average day, third-party sellers make up about 58% of total Amazon sales. So again, that leans and points to, hey for Prime Day, this year, a lot of the big movers, a lot of the biggest volume sales items, were Amazon's own products.

Chris:

Right.

Brett:

And some of their 1P deals, which is interesting. So yeah, in talking about Prime Day launching, holiday sales, as we all expected, we all thought, "Hey, it's the beginning of Q4, we're training customers now, to potentially shop early." Right? We all remember what happened in the lockdowns, where you'd order something, shipping times are delayed, it was just a nightmare. So Amazon's kind of trained people to think, "Okay, if I want to get my stuff in time for Christmas, in time for the holidays, I'm going to need to order earlier."

Brett:

And there are even some surveys that Google put out and a few others, that showed you, 65%, 70% of all shoppers are saying, "Yeah, I'm shopping early this year." So we all thought, "Hey yeah, Amazon Prime Day, that's going to be it. It's going to be the launch of holiday sales." And it appears like, that's probably true. The sales did take a dip after Prime Day, they always will, but maybe not as dramatically as last year. Is that what you saw, the post Prime Day dip was probably not as significant as last year?

Chris:

Correct? Yeah. It seemed to be at a lower level, and then again, even if you compare it to the week, two weeks prior to Prime Day, and you skipped that week prior, it was still up 5% to 15%. And one thing I would note, I know we're talking Prime Day, but this is after the election, or at least should be, depending on where we're at.

Brett:

For all intents and purposes, it's after the election, but sure. Yeah.

Chris:

Yeah.

Brett:

There's some drama still lingering, who knows?

Chris:

Yeah. One of the things we're watching is, we saw a lull for a few days during that early period prior to an election and then right after. We're seeing it pick back up. So it's like we had Prime Day and then there's the post Prime Day reprieve and then we should be launching into, what should be a great Q4. And then you also come up against an external thing, like the election and now that, that's over, our hope is that it's all steam ahead and really be able to rock, just a great rest of Q4. And we're seeing that the few days after, and I don't want to blame it on Prime Day, but it does seem that there's these little things were hitting and then trying to move past.

Brett:

Yeah. It's such an interesting Q4, when you put it all together, right? Pandemic year, Prime Day in Q4, which never happened before, election and not just a normal election, but a highly contested election, record voter turnout, all kinds of craziness surrounding the election. And what's interesting is, I remember from a long time ago, seeing these studies that would show how consumer behaviors shifts for a few days, around the election.

Brett:

People just wait, even if they're buying cookware or something like that, which doesn't matter. You ask a person, "Well, what if this person gets elected?" "Oh, well I'll buy the cookware." "What if the other candidate gets elected?" "Yeah. I'll still buy the cookware." "Why don't you buy it now?" "I don't know. I'm just going to wait."

Chris:

Yeah.

Brett:

That's kind of the mindset around an election and probably this one, even more so. So definitely saw a little bit of a lull, some weird activity going on around the election. But now yeah, I think it will be full speed ahead. And we'll recap this on a show later, but really curious to see, what does the Cyber Five going to look like? I'm confident it's going to be another record. It's going to be big, but what's potentially possible is that, holiday's going to be spread out a little bit more. So we're definitely seeing that trend and it will be also interesting to look at, how does early November this year look, compared to early November of last year?

Chris:

Yeah.

Brett:

And we don't have like full data, and just for those that don't know, Chris Tyler was a mathlete. He knows numbers, he can quote numbers, he can do math in his head like nobody's business. So we'll take this with a caveat of, this is just you going from your memory and what you've seen and remember, but that's still better than nothing. What are you experiencing early November this year, compared to last year, would you say?

Chris:

Yeah, I would say that for the most part, our percent of growth year-over-year, is a bit higher than October was and that even includes Prime Day. Within it, obviously, not quite apples to apples, but that's my closest comparison. Right? All things considered-

Brett:

That's even with the first couple of days of November being kind of weird because of the election. Yeah.

Chris:

... yeah. So November, the first day started strong and it had a lull and then the past five, six days or so, and then at a pretty good clip. So all things considered, I think our year-over-year growth will be, maybe 5% to 20% higher than it was in October. And side note, just a little brag on myself, I did go to the math Olympics when I was in school.

Brett:

I know you did.

Chris:

And I had the first place medallion, gold medal, I don't know what they called it. So yeah, I am a mathlete, I'm proud of it.

Brett:

Not just a mathlete, but you're a math Olympian. That's the next level, the math Olympics, was that a New Jersey wide thing or what was that?

Chris:

Well, I went to a private school, so it could have been like-

Brett:

It was impressive, you went to the Olympics. Let's just leave it at that. It was awesome.

Chris:

... yeah, yeah, yeah. I'm going to make a mess, special Olympics joke and I'm like, "I can't do that."

Brett:

You can't do that. No, no, we definitely can't do that. Oh, that's awesome. So impressive stuff. So crazy growth that we're seeing in November. Let's talk about specific ad types, I think this is interesting as well. So our agency, we've been one of the early adopters of sponsored brand video ads, where we spend a lot of money on sponsored brand video ads. And for those that don't know, those used to be called video in search. And so those are the little videos that you see as you're scrolling through Amazon, you're searching for picture frames, you're searching for dog treats or whatever, and as you're scrolling through the results, you see a video. There's a video playing, it's like demonstration type video, maybe little infomercial type video, but it's not like a branding video, it's a product demo video. What have we seen with sponsored brand video ads, both during Prime Day, but then also, early Q4 2020?

Chris:

Yeah. A sponsored ad video is the biggest thing for me right now, in terms of, all advertisers should be utilizing it. Not only should they be utilizing those, you're running it on all products, testing AB copies of videos, just doing everything they can to lean into this while it's still at that phase of early adopter. Because we are seeing it get a little more competitive, but still really great results. And prior to Prime Day, performance was probably 30% to 40% better in terms of ad cost return, than for advertisers overall.

Brett:

That's really crazy to think about.

Chris:

It's nuts. And it's all about the placement. So anyone listening, should go check out the video, Brett and I did the podcast sponsored ad video.

Brett:

Yes.

Chris:

Talking about, it's the placement, but you'd want really quality video, as it gets more competitive.

Brett:

Yep.

Chris:

And I know that's your field, not mine, Brett, but I am with you on that. So what we're seeing is, the challenge is really just volume and you've got that one placement. You can't really push it past the point of just owning it for as often as you can, just because it is just one spot. So leading up to Prime Day, we got very aggressive and we saw ad sales from about 50% for the two Prime Days, versus the period prior, ad costs did increase maybe 20%. And that's, if it goes from 20% to 24%, to me, that's a 20% increase. With that being said, they were still 30% lower ad costs on the overall advertising account.

Brett:

Which is awesome. So just to reference that episode, it's episode 132, so go back and check that out. It's Chris and I talking about, the two hottest trends in Amazon advertising, sponsored brand video and Amazon DSP. But yeah, and really, because it's new and you're talking about the quality of the video, right now, I think it can work, even if it's a pretty subpar video, even if it's not a video you love, it'll probably still work pretty well. If you run a great video, it's going to crush it, but still the performances is increasing. And how much are we seeing the volume grow with sponsored brand video?

Chris:

So we're seeing it increase a good amount. I would say, for accounts that we start with a good set of sponsored brand video, within a month or two, we probably hit 80% of the plateau. What I mean by that is, we're taking keyword search terms, they already have themselves some products, sponsored brand, doing keyword research and we've learned pretty quickly because of volume's limited, to go really aggressive on those bids. So maybe some day that'd be two bucks for a sponsored product, we're going $5. So it's less of a slow ramp up and more of, we want to blitz it, come in strong.

Chris:

So really, the growth happens within a short two months and then it's a steady growth, as you add converting search terms and things like that. But I would say, that month-over-month for October into September, probably saw growth of 25% to 50%, and if you go back to when we started, maybe four months ago, we're probably like four X.

Brett:

Yeah.

Chris:

Just because, more of our advertisers have leaned into it. We've learned a lot in how we optimize. And I do think that's going to continue to grow, as we keep our foot on the pedal.

Brett:

Yeah. And that's amazing growth. And I think another part of that too, is that Amazon's potentially, going to start showing them more, we're seeing them more. I'm seeing them definitely, more frequently now, just as I'm shopping for stuff.

Chris:

Yeah.

Brett:

So I'm not looking for ads, but just shopping on Amazon, I'm seeing sponsored brand video ads more and now, they're available on desktop when in the beginning, they weren't, so I think that's going to make an impact as well. So yeah, now is the time, run sponsored brand video, you need to get that going in Q4, if you can at all. So fantastic. Any other interesting takeaways, interesting data points from Prime Day or from early Q4, this year?

Chris:

Yeah, I would mention, talking about that episode we did together, a month or two ago, with DSP, we saw a really nice growth, not only on Prime Day, but the week after. I know we talked for overall, account sales were up 10% or 15%. But it was really cool, the impressions and sales overall performance for DSP, the two Prime Days, increased about 100% to 150%. It did really, really well and that was to be to expected, to a certain extent. We're doing retargeting, we're doing some competitor targeting in InMarket.

Chris:

So we're really honed in and we had a lot of clients running deals, so we capitalize on that. They're sharing a lot of those, but what was pleasantly surprising, was that the week after, we still saw impressions, we were up about 50%, versus the two week prior period to Prime Day, and then sales were up 35% to 40%.

Brett:

Wow.

Chris:

The convert dipped a little, but we came in with, "Hey, you're going to get traffic during Prime Day. They're not all going to convert."

Brett:

Right, right.

Chris:

Obviously, the ones that didn't convert on anything, we're still showing the product, we ran a strategy that had coupons going the week after Prime Day. So since there's the feeling, if you missed the deal, here's a deal, here is what you probably want at the price you want, and that shows in DSP, that coupon actually shows. So we're actually seeing the tail end of that still in place and we're hoping that parlays into a really solid, rest of the year for DSP.

Brett:

Yeah, love that. Just for those that don't know, DSP is display ads primarily, where you can run display ads on Amazon and off Amazon, based on shopper behavior data. So like Chris mentioned, we're running, mainly retargeting ads to be able to visit a particular ACE and then they don't purchase. We're going to retarget them and try to get them to come back and purchase. So, really saw amazing DSP growth. We also talk about that, talk about DSP in detail, in episode 132. But saw some great growth with the Amazon DSP around Prime Day and after and so I think that's also a good indication of what's to come for Q4, as well. Any other, as we kind of wrap up, we just got a couple of minutes, but any other final key data points or interesting takeaways?

Chris:

I would say, for DSP and PPC, it could be the way we run it, but our CPC only increased about 5% to 15%.

Brett:

Interesting.

Chris:

I know there's things out there like, double your budget, double your bids, it can be pretty aggressive. We do that with certain campaign strategies, but not overall. The search volume is there and we want to capitalize on it, but efficiently. And then with DSP, we saw ECPM, which is cost per thousand impressions, increase about 25%, a little bit higher, to be expected. One DSP is being pushed across the board by Amazon reps, agencies are leaning into it as we are. And it just is a great advertising avenue and so more people are leaning into it, but I did expect it to be a bit higher. So it was nice to see that we were getting efficient, relevant traffic, at not too high of a higher cost.

Brett:

Yep. Totally makes sense. That's really interesting that cost did go up and we expect that, right? We see that on the Google side as well, as we get closer to the Cyber Five, CPCs go up and cost per thousand, go up, it just does, more competitive, but conversion rates also go up. So performance is usually still better, and so it's interesting that the CPCs only went up that much for Prime Day-

Chris:

Yeah.

Brett:

... so that's super interesting to watch, as well. Well, Chris, really appreciate it, man. Hey, third time, crushed it. I guess we'll have to have you back. Chris Brewer is getting nervous, starting to sweat. But hey-

Chris:

Well, we got to do one with the three of us, but count it as my fourth one.

Brett:

That would even things up. Yeah, yeah, yeah. Yeah. Well, no, it wouldn't, nevermind. Okay.

Chris:

But it's me, with Chris Brewer as a guest.

Brett:

Okay, here you go. I like it. So do go back and check out episode 132. We'll link to some things in the show notes, some articles and things we're referencing in terms of global Prime Day numbers, and then yeah, be looking for another update. We'll have another update episode coming to look at the Cyber Five and the rest of holiday as well, so check that out. But Chris, I appreciate it, man. Thanks for coming on.

Chris:

Thanks for having me.

Brett:

Yep, absolutely. And as always, we appreciate you, our listeners, we know there's a lot of different podcasts you could pick from, lots of information out there, thank you for spending your time with us, we greatly value that. And hey, we'd love to hear from you. What would you like to hear more of on this show? What would you like us to tackle next? If you haven't done it and you're so inclined, I would love if you leave that five-star review on iTunes, it helps other people discover the show. And with that, until next time, thank you for listening.

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