Amazon is leveraging advertising as a way to drive profits in their international markets, but these new markets are not as competitive as the United States. Amazon advertising revenue is growing at 36% internationally and in the US, so advertising growth in Europe is on par with that of the US, but lacks the competition.
The Gartner L2: Amazon Europe 2019 report finds that advertising investment on the European platform is well behind the US’s. Sponsored Products and Sponsored Brands are cost per click, keyword-targeted ads on Amazon that brands can bid on in an effort to increase product sales and brand visibility. Sponsored Product advertisements appear alongside search results and are essential in driving product sales. The US has an average of 3.5 times as many Sponsored Product impressions per keyword as Europe. The reduced impressions per keyword speaks to lesser competition.
Traditional beauty brands such as L’Oréal and Maybelline are examples of category leaders who are utilizing advertising. The two brands have been able to capture 5% of Sponsored Product impressions in France and Germany. Additionally, they were two of the best-selling brands in beauty with an average 5% share of Best Sellers across locales.
Sponsored Brand ads link to well-defined brand stores on Amazon and are a resource to improve the consumer experience and generate interest around products. Sponsored Brands also had lower advertising investment in Europe where, on average, less than one brand ran a Sponsored Brand ad per keyword, which is three times less than the U.S. There are fewer brands competing for Sponsored Brand advertisements, so the brands who do choose to advertise this way, have control of the keyword because less than one brand is competing with them per keyword, on average.
Given the low levels of advertising investment in Europe compared to the United States, brands on the European platforms should begin experimenting with advertising strategies. As Amazon continues to leverage advertising in Europe, these advertising methods will only become more competitive and crowded with brands.