240%

Reduced Advertising Costs

Evidence and data. Interviewees identified that the adtech suite from Amazon Ads, which is comprised of its DSP and Amazon Marketing Cloud, helped their organizations reach a broad, incremental audience for both endemic and nonendemic brands across Amazon’s owned and operated channels and premium third-party supply. Native connections from AWS to publisher supply and the breadth of Amazon’s omnichannel inventory encouraged interviewees to increase ad spend with Amazon DSP. The associate director of Amazon marketing at a CPG organization said: “They are getting more full funnel with marketing, which you cannot do with a lot of other retail platforms. Amazon’s media side is a marketer’s dream because you can attribute sales to within that funnel. ... The wealth of information you have on an Amazon consumer and their reach level is huge; it gives you the proof to validate sales audiences.”

The head of partnerships at an agency also identified Amazon Ads’ access to inventory beyond Amazon’s owned and operated channels as a significant advantage. The interviewee said, “For a publisher with the kind of resources [Amazon Ads has] and the data and tech, it’s a huge opportunity for us to leverage.”

Amazon Marketing Cloud, where advertisers can leverage Amazon’s first-party data, amplifies the reach of Amazon Ads. Advertiser interviewees matched their own data to the unique signals of Amazon Ads to build high-intent audiences for targeting. They also used Amazon Marketing Cloud to implement frequency caps to ensure those exposed to a campaign weren’t inundated. The global programmatic lead at an agency said: “Amazon Marketing Cloud identified our optimal frequency cap for audiences. We found the sweet spot to expose subsets of users to ads and save money to be reinvested elsewhere and drive the same results.”

Interviewees also appreciated Amazon’s competitive platform fees, which helped their organizations maximize their budgets’ impact. The senior director of strategic marketplace services at an agency said, “Amazon’s fees are a cost-effective lever that’s growing adoption of the Amazon DSP among clients because the direct publisher deals are helping with business cost management.” Along with attractive platform fees, interviewees recognized that Amazon included access to features like bid shading and postbid reporting without additional charges, unlike other platforms. Avoiding incremental charges allowed budget to be reallocated towards more performant media.

Modeling and assumptions. For the composite organization, Forrester assumes the following:

• The enterprise-sized organization allocates $150 million toward advertising. Advertising that can be optimized, which consists of paid media that doesn’t reach or engage audiences, represents 20% of this ad spend.

• In Year 1, the composite organization allocates 10% of its ad spend to Amazon DSP. The organization sees a 30% improvement in how efficient its ad dollars are in reaching a broader, higher-intent audience. Based on this improvement, the organization increases its ad budget with Amazon DSP to 20% in Year 2 and 25% in Year 3. As the organization builds more audiences with Amazon Marketing Cloud and applies insights to improve performance, the efficiency of ad spend rises to 50% in Year 2 and 65% in Year 3 as it averages lower cost per engagement, impressions, and acquisition.

Risks. Differences across organizations that may impact this benefit include the following:

• The total ad budget and level of investment in Amazon DSP over time.

• The share of ad dollars that are ineffective and available room for improvement.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $6.3 million.

Increased Return On Ad Spending

Evidence and data. The suite of Amazon Ads adtech solutions helped interviewees’ organization enhance the performance of advertising campaigns. In addition to leveraging the breadth of reached offered by Amazon DSP, advertisers leaned on Amazon Marketing Cloud to create audiences based on strong signals of intent. The global programmatic lead at an agency shared that targeting more precise audiences led to robust lift across key metrics for a CPG client, particularly around video channels, including purchases and product page views. These metrics increased by as much as four times compared to baseline performance.

The head of partnerships at an agency detailed how they leveraged live events on Amazon Prime Video to customize a campaign to different audiences based on geography and time of day, even while the audiences were watching the same live program. They noted that Amazon “crushed it” across sectors, including financial service providers and quick-service restaurants. In one instance, precise audience targeting with Amazon Ads delivered a 35% to 40% lift in conversions.

There are many factors that influence ROAS and interviewees used Amazon Marketing Cloud for metrics beyond ROAS to gauge if they were meeting performance goals. The senior director of strategic marketplace services at an agency said: “Amazon Marketing Cloud has helped provide more information to make smarter decisions on how we view performance. With our clients starting to invest more in DSP and seeing high returns, it might come from retargeting loyal or ‘likely to buy’ customers which doesn’t necessarily mean you’re growing business. AMC has changed our ability to understand ‘new to brand’ customers who aren’t actively shopping and how well we’re doing in bringing them into the brand ecosystem to consider making a purchase.”  

This interviewee also looked at these metrics across the funnel with Amazon Marketing Cloud. For example, they reviewed how likely a customer was to convert if exposed to an ad two or three times. A key takeaway was that, if an individual was exposed to Amazon DSP and online video ads then a sponsored product ad, it had a halo effect on conversion rates. In one example shared, a fashion brand saw a nearly 60% increase in sales from new-to-brand customers.

Modeling and assumptions. For the composite organization, Forrester assumes the following:

• The total ad budget allocated to Amazon DSP starts at $15 million in Year 1 and grows each year as the organization expands its business with Amazon Ads, reaching $37.5 million in Year 3.

• The average return on ad spend for every dollar spent at the composite organization is $4.

• The return on ad spending increases by 30% in Year 1 and further improves to 50% in Year 3 as advertisers see more new-to-brand purchases, conversions, and identify audiences with a high propensity to convert.

• A profit margin of 10% is applied to the revenue results.

Risks. Differences across organizations that may impact this benefit include the following:

• Overall average ad spend at the organization.

• Changes in costs for advertising, including CPC and CPM rates, can influence returns.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $10.1 million.

Analysis Time Savings

Evidence and data. Interviewees said that alongside supporting stronger ad performance, the Amazon Ads adtech suite drove analytical efficiencies for users. Amazon DSP enabled their users to automate ad buys of first- and third-party inventory and do so with confidence given the insights Amazon Marketing Cloud supplied.

With Amazon Marketing Cloud’s AWS-powered clean room, data analysts at the interviewees’ organizations spent less time reviewing customer data and performance indicators. The solution helped surface these connections through audience insights from Amazon Ads. This information helped accelerate testing, decision-making, and personalization.

Amazon Marketing Cloud’s value proposition of helping advertisers make more informed decisions resonated with interviewees. The digital media manager at an insurance organization said: “Full funnel is something that isn’t as common with programmatic buying because we’re focused on driving conversions. So the fact that Amazon has the ability to target different strategic layers of the user journey has helped them.”

The senior director of strategic marketplace services at an agency shared that they were an early adopter of Amazon Marketing Cloud, leveraging it for the past five years. Over the past two years, it has become common practice to incorporate the solution into Amazon DSP campaigns for every account. Users typically build audience segments like cart abandoners or users who engaged with an ad did not convert to hone lower-funnel performance.

Interviewees also relied on information from Amazon Marketing Cloud to identify pockets of underperformance and opportunities for more precise targeting. The global retail media director at a CPG company said: “Amazon has released category insights on Amazon Marketing Cloud that allow us to look at where we stand in a category and our gap in share of the market. Amazon Marketing Cloud allows us to create audiences and make plans to close that gap. With the five-year look-back window on Amazon Marketing Cloud, I can see if I’m recruiting more people, retaining them, or churning them and if the plan I put in place is moving the needle or not.”

Modeling and assumptions. For the composite organization, Forrester assumes the following:

• There are 50 marketers and data analysts using Amazon Marketing Cloud on a regular basis at the organization.

• Each employee allocates 30% of their time to creating audiences based on unique audience data as well as reviewing advertising’s performance.

• In Year 1, employees are 10% more productive with data operations. As the employees familiarize themselves with the solution and implement best practices, they experience greater operational efficiency. By Year 3, employees’ productivity with data operations increases to 20%. 

• The average fully burdened annual salary for these two roles is $150,000.

• The TEI methodology incorporates the assumption that a large group of employees who experience a productivity benefit will rededicate time to additional work and a portion to nonwork. For this time savings benefit, 50% of recouped time will go toward additional work. The other half of time saved enables employees to take longer breaks or work less against tight deadlines, making for an improved employee experience.

Risks. Differences across organizations that may impact this benefit include the following:

• The number of marketers and data analysts as well as the amount of time they spend reviewing data and mapping out their advertising strategy.

• The fully burdened annual salary for the employees.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $370,000.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Richer insights from performance analysis. Interviewees appreciated the depth of analysis offered, helping their organizations improve decision-making going forward. The head of partnerships at an agency said: “It’s impressive what I’m seeing come out of Amazon toward innovation around measurement. We have clients looking at omnichannel measurement, and now we can run a campaign and see how that effects other channels.” This interviewee also shared how the user-level data led their organization to pursue advertising on Twitch, which they hadn’t previously considered but consumption metrics for a particular audience showed an opportunity their client could benefit from.

• Strong opportunity for nonendemic brands. Interviewees from agencies and non-CPG organizations relayed how Amazon Ads has moved past the perception of being just for endemic brands. They noted it is now a robust solution for nonendemic brands. The head of partnerships at an agency cited how Amazon Ads’ data could be beneficial for nonendemic brands: “Omnichannel measurement [with Amazon Ads] and how channels affect each other has big implications for nonendemic brands. It can be a litmus test for performance across channels.” In addition, some interviewees said the growth of Amazon’s STV business has driven strong interest among their nonendemic brands. The senior director of strategic marketplace services at an agency said: “The launch of Prime Video with ads is appealing to clients in verticals who don’t operate or sell on Amazon because it offers incremental access to reach users. We’re seeing the fastest growth of spending on Amazon Ads’ inventory among brands that don’t sell on Amazon, specifically allocating spend toward streaming TV inventory.”

• Continued improvements to the Amazon Ads platform. Interviewees noted how Amazon Ads continued to iterate on the accessibility of its DSP and Amazon Marketing Cloud. The addition of features, including Brand+ and Performance+, improved the UX for employees by streamlining workflows through AI-optimized planning and buying; performant advertising only took a few clicks to complete. Interviewees said these enhancements provided advertisers with greater flexibility to efficiently manage ad operations and adapt to shifts in market conditions. The global programmatic lead at an agency said: “They’ve really listened to feedback on what to do short and long term to improve the sophistication we see from them. I think that Amazon has truly delivered — and I don’t say that lightly — based on the volume of platform updates we continue to receive.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Amazon Ads adtech solutions and later realize additional uses and business opportunities, including:

• Enhancing advertising performance with Performance+ and Brand+ tools. These artificial intelligence solutions powered by AWS are part of Amazon DSP, with Performance+ helping drive conversions and Brand+ generating brand awareness. Interviewees said their organizations had ran several tests with Performance+ and were just getting underway with Brand+ tests.
  Performance+ enabled interviewees to set specific goals, including ROAS, that the solution algorithmically delivered. The global retail media director at a CPG organization said: “From what we’ve seen, Performance+ is delivering on 80% of our objectives. For example, I saw we need to increase ROAS three times as the goal, and the campaign basically delivers that. We’re not fully mature with it but we continue to test it.” The interviewee added that their organization is looking to implement guardrails to ensure it continues to get these kinds of results, especially as it takes on Brand+.
  The outcomes of Performance+ encouraged interviewees’ organizations to adopt Brand+. The digital media specialist at an insurance company said, “Performance+ has been really successful for us once we started leveraging it, and that’s making us confident about taking advantage of Brand+.” In their organization’s use case, they primarily focused Brand+ on upper-funnel activity and Performance+ on lower-funnel advertising.
  The global programmatic lead at an agency shared that, while some clients were still cautious about the solutions because they wanted to maintain brand safety, the agency was encouraging clients to use them. They noted: “We’re telling clients that these solutions could be an excellent product for them. But they want to control over what inventory they appear on, so we’re working on finding the right time for the client to try using these solutions.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).