We all know the pandemic had an enormous impact on Amazon during the 2020 holiday shopping season and indeed throughout 2020. Toilet paper rocketed to new heights of popularity, while many usually popular products got stuck in a holding pattern because of supply chain or fulfillment challenges.
We wanted to really understand at a deep level how 2020 changed search and advertising on Amazon. And we knew we needed to break the analysis down by Amazon category, because different types of products saw very different trajectories throughout the year. Our latest reports provide an analysis of the holiday shopping season along with what happened over the first ten months of 2020.
To detail the reports, Kyle Barron, Senior Manager, Business Intelligence & Analytics, joined Andrew Waber, Director of Insights, in this webinar. They shared highlights from the findings and talked through some of the implications for brands and sellers on Amazon.
Andrew explained that many of the trends we observed during the holiday period were unsurprising: search traffic and ad costs rose significantly over pre-holiday levels, with Black Friday and Cyber Monday seeing peak search volume across many categories. On the other hand, more surprising observations included peak volume for some categories that occurred after Cyber Week and cost-per-click (CPCs) that rose less than in 2019 for some verticals.
Kyle provided context for some of the findings, reminding us that retailers and marketplaces alike pushed sellers toward promotions that spanned a longer time period in order to lighten some of the pressure placed on fulfillment centers by a single peak shopping weekend.
They also dove into some of the unique situations for the differing verticals both during the holiday season and beyond, really highlighting how every vertical is different on Amazon. For example, ‘Grocery and Gourmet Foods’ search volume went up significantly in March and April, nearly double the search traffic levels from February, as people scrambled to acquire food in new ways, and stock up for an uncertain pandemic timeline.
On the other hand, beauty and personal care saw conversion rate and CPC both drop with an increase in search volume as people shifted to getting many of their basic essentials like shampoo or shaving cream online. People used supplies they already had on hand and then as they ran out, there was a jump in sales volume in April.
Our new search and advertising benchmark report, looks at search, CPC, and conversion trends across 10 different verticals and contextualizes them with social behaviors during the pandemic.
Andrew and Kyle agreed that the data from 2020 is instructive for planning for 2021, but that some trends will continue while others will certainly change. As Andrew put it, “Some of the things are going to go back to ‘pre-pandemic normal,’ but a lot of these habits on the part of consumers are becoming more ingrained.” That means advertisers will surely be kept on their toes in the coming months and will need to stay nimble to respond to ongoing changes in the marketplace.
Watch the Amazon holiday season webinar replay
Read the full transcript
Andrew Waber (00:00):
Hey, everyone. Welcome to another webinar. Hope you’re all having a very nice Thursday. My name is Andrew Waber. I’m here with Kyle Barron.
Kyle Barron (00:12):
Andrew Waber (00:12):
I’m really excited. Hey, Kyle. How you doing?
Kyle Barron (00:17):
I’m great. How are you?
Andrew Waber (00:18):
Doing well. It’s a nice sunny day here in Boston, still cold, but Boston in February.
Kyle Barron (00:25):
I’ll take the sun. I haven’t seen the sun in three days.
Andrew Waber (00:30):
Thanks everyone here for being with us today. Just a few housekeeping notes before we get started and as people kind of trickle in over the next minute or two, this webinar is being recorded, so you will get a copy of this recording roughly 24 to 48 hours after the conclusion of the webinar. You’ll also get the full slide deck that we present here, and we’ll discuss this within the webinar itself, but we have an exclusive new data that we’re actually debuting as part of this webinar that we’re going to send a link to you kind of as part of the replay as well. I will be kind of going through a very high-level overview, some of that data, and then you can kind of dig into it within the follow-up. Additionally, at any point during the webinar, you got a question that comes up, we’re going over something, you have a follow-up question, use that question box that’s on your screen there to enter it, and then we have Q and A at the end.
Andrew Waber (01:25):
We’ll get to your questions as they come in. Again, thanks for joining us. We’ll probably go ahead and get started in just a minute. Just so it’s easier, folks who are watching this on mobile, Kyle and myself, we’ll just turn off our cameras just so if folks are watching on mobile, you’ll actually just be able to see just the presentation, which sometimes makes it easier for folks. With that, one second, I’m going to turn off my camera and just start sharing my screen. Great. Just to reiterate, this is a webinar. We’re going to be going over some key stats from the holiday season on Amazon. This is the product of a study the Teikametrics data science team did. This is kind of really a third part of an ongoing series where we kind of looked back both at last holiday season.
Andrew Waber (02:18):
This is kind of the one where after the 2020 season wrapped up, let’s look back, see what happened. Let’s try to do some interesting breakdowns to kind of illuminate what you as a brand might take away in terms of your performance benchmarking it against what happened with the rest of the vertical. Again, my name is Andrew Waber. I’m the director of insights here at Teikametrics. Kyle Barron is here with me. He’s a senior manager of BI and analytics here. Kyle, I think it’s really great to have him on because while I’m looking at this data more from a kind of a high level perspective marketplace, Kyle gets in the weeds with advertisers as they’re really looking at their presence, what they can do differently, and this kind of helps juxtapose that with what’s happening in the wider market. I think it’ll be great having that perspective as well, so thanks again, Kyle.
Kyle Barron (03:09):
Of course, my pleasure. Really excited to dive in here.
Andrew Waber (03:12):
Awesome. Let’s go over quick high-level agenda what we’re going to cover today. First, we’re going to go through kind of on a vertical by vertical basis, first like high level trends, what were some trends that we saw, what’s trends that maybe were new this year and then going into the verticals, how did they fare in the 2020 holiday season, and specifically kind of around click volume and ad prices on a year over year basis. When you looked at the jump between the pre-holiday and Cyber Week itself, what did those look like, and then also over the course of the entire holiday season. Really, when we look from November all the way through the shipping cutoff, how did things change on a vertical by vertical basis, what does that tell us about how kind of shopping behavior also took a turn kind of in 2020? What does it tell us about it?
Andrew Waber (04:05):
Then as I mentioned earlier, we’re kind of going to give a high level overview of some brand new data that’s going to be debuted just in this webinar, and then we’re going to be sending around to all of you around really what trends to watch for in 2021 based on some really, really detailed benchmarks from last year. Then again as I mentioned, we’re going to wrap up with Q and A. Just a reminder, at any point during the presentation, feel free to ask questions. We’ll get to them at the end, but you don’t have to wait until the end if they pop up in your head, definitely pop them in there as they come. For those of you that may be on here may not be familiar with Teikametrics, what we do is we provide marketplace advertising optimization and bid automation, and it’s grounded really deeply in data science.
Andrew Waber (04:52):
Our software, it’s really designed to match your business goals for profitability, or maybe for growth for individual products and campaigns, not just across everything, but where you can kind of laser focus on what you want to do for individual products, product lines, individual campaigns in. The idea is that this is going to keep you competitive. When the value of a click is kind of within your desired threshold, that’s what you’re looking for, right? You’re looking for growth, or you’re looking for profitability, it’s going to keep you competitive within that goal, and also step back when it’s not. When that price is getting too high or it’s not worth that value, our bidder will kind of take you out of that auction, so you’re not needlessly spending when you don’t need to. Let’s say your business needs a little extra help in terms of hands on keyboard, you got a large product catalog, more complex business, beyond our software, we also offer a team of expert analysts and they really act as an extension of your team when it comes to them discussing, executing and reporting on your ad strategy.
Andrew Waber (05:48):
This goes across Amazon and Walmart. Our mission is really to unlock your growth really across those most valuable marketplaces. We’re helping brands large and small. I mean, you see some of the bigger names up here, and we’ve helped a lot. We’ve been around for a while now, and hopefully it gives you a good idea. If you’re not familiar with what we do, just a little bit about us. Let’s get into the study itself. Some quick notes on the methodology that we’re going to be talking about for the majority of this presentation. The categorization we looked at here, we looked at an ad group by ad group basis, and we categorized based on the ASINs within that ad group kind of across Teikametrics clients. You’ll see a lot of these metrics are comparison based, and specifically we’re comparing the baseline period to the cyber week period.
Andrew Waber (06:43):
Now, the baseline period in 2020 was 11/19 through 11/25. Excuse the typo on the second line, that’s the 2019 baseline, which was 11/21 through 11/27. Again, this was essentially the week prior to cyber week in both years. Then the cyber week periods as you expect were subsequent to that, so it’s kind of start in Thanksgiving all the way through the end of Cyber Monday. In 2020, that was the 26th of November through the 1st of December, and in 2019, it was the 28th through the second. Then you also see some time series data. Again, you’ll see a line graph where we’re showing kind of on a day by day basis how things are going. That covers nearly two full months, so the first day of November all the way through really the shipping cutoff, even a little bit past it on the 23rd, so the day before Christmas Eve.
Andrew Waber (07:41):
In that sense, really what you’re looking at is the non-holiday period, which you might talk about, is the first through the 25th again in 2020, but in 2019, that was also the first to the 25th. We’re kind of comparing the like for like, in terms of they have the exact same day on the period. Overall, what happened over the holidays on Amazon? First off, there’s holiday trends that happened that you probably expected if you’ve been in the marketplace for a while. Search traffic rose, and there was a lot over what happened the week prior, pre-holiday levels. Alongside that, you had advertiser demand really increasing. Alongside search traffic rising, ad costs were also rising over pre-holiday levels again, as you expect. Everyone knows people are shopping, I want to advertise. That drives up competition, drives up costs.
Andrew Waber (08:36):
Across a number of categories, Black Friday, Cyber Monday, those represented the peak search volume across a lot of those categories in terms of just really when you looked across that entire almost two month period, that was the peak and it’s likely to peak for the entire year. There’s some that maybe you weren’t expecting that happened this past year. First one is that you saw some peak volume for some categories actually occur after cyber week. Now, in prior studies that we’ve looked at, we actually have seen this across categories and in some respect even last year, but definitely happened, it was fairly pervasive this year. We saw more people essentially do… Just on a volume basis, there’s more people doing shopping in a given category after those “peak shopping days” of Black Friday, Cyber Monday. Across some verticals, CPCs actually rose less in 2020 as compared to 2019 that comparing the CPCs from that week before to the CPCs of Cyber Week, that increase was outpaced really by two years ago, by 2019.
Andrew Waber (09:45):
This was probably the one that was most pervasive, was that across verticals, the search volume jump in Cyber Week compared to, again that week before across every single category looked at, it was outpaced by what happened in 2019 where the percentage increase from that baseline figure as it were was higher in 2019 as compared to 2020. Really, let’s say if you were expecting tremendous, tremendous volume increases, there definitely were volume increases, but if you were looking for the same maybe percentage that you were looking at last year or two years ago, you may have been a little disappointed. This kind of speaks to some kind of wider truths about the marketplace, and I know Kyle, if you have kind of anything to share about maybe just some observations as you’re kind of working with clients and just overall kind of your thoughts.
Kyle Barron (10:35):
The last one was interesting, but it was almost a little bit expected because Amazon along with a lot of other retailers were trying to get away from Black Friday, Cyber Monday and having that weekend be a huge spike and really push Cyber Month or Cyber November or Black November or whatever anyone was calling the entire month and really pushed on sellers and vendors to make sure that they had inventory ahead of time going into November, and pushed promotions throughout the whole month and not just that week because they didn’t want to overload their fulfillment centers with order volumes that they couldn’t handle.
Kyle Barron (11:26):
That was certainly one of the reasons that we saw contribute to why the jump from the week before Cyber Week to Cyber Week was not as large as the year prior. I think that because a lot of sellers had success during that month as well as Amazon, that this might be a trend moving forward, so that when you’re planning your Q4 strategy this year, maybe getting ahead of it and making sure that you’re running promotions earlier might be a beneficial strategy because we did see the search volumes support that model. You always want to be one step ahead of what everyone else is doing, and I think some of the insights that we’re about to present here will help you be better informed come Q4 2021.
Andrew Waber (12:30):
That’s a great point. I mean, definitely it’s something where, and we’ll talk about this later, as you think about 2021, it’s worth realizing the trends that we saw in 2020, I would say everything was upended. As vaccines come out, et cetera, there’s a tendency to think one or two things either nothing’s going to change, these trends are permanent, or things are just going to go back to the way things were. It’s really likely that the truth is going to be somewhere in the middle. A lot of these habits amongst consumers, amongst the retailers, as you’re talking about, in terms of how they’re running your business are likely going to stay there in 2021 and beyond. Some of the things are going to go back to “pre-pandemic normal”, but a lot of these habits on the point of consumers are becoming more ingrained in the part of retailers if they discover things about their business.
Andrew Waber (13:18):
The point of Amazon, that they’re likely, as a net positive, they might try to encourage things like that again, like we’re going to have a Cyber Month and then try to do stuff like that. Definitely worth keeping an eye on, and we’ll cover that a little bit later. Let’s go through kind of some of the details. From a vertical by vertical perspective, what happened when it came to just volume? We talked about this earlier. When you look at the volume increase from the week prior to Cyber Week and Cyber Week itself, every category jumped, but when you look year over year, that jump from that prior week to Cyber Week itself, in 2020, that jump was smaller than that jump in 2019. Now, you have some categories, it’s pretty similar. Let’s say baby products, toys, and games, it’s still outpaced, but not to an incredible amount.
Andrew Waber (14:09):
Then you see certain categories where the jump was tremendously bigger. For instance, office products is a good example, electronics is another example here, and that’s notable. If you were kind of thinking about this from a volume perspective vis-a-vis what you’ve been getting maybe that earlier than November, you may have been disappointed and said, the volume wasn’t there, but I’d say there’s a caveat here, which we’ll talk about, which is the pre-holiday baseline of activity. We talked about pre-holiday, again, this is November 1st through November 25th. What was that kind of daily search volume before Thanksgiving in 2020 as compared to 2019, and what you see kind of across a lot of these categories and certain categories obviously more than others, it was that baseline level of daily search activity was higher.
Andrew Waber (15:07):
That meant that that jump on a percentage basis may have been smaller, but if it was overall volume may have been similar, may have been even more depending on your category. It also may have meant that if you were, let’s say a seller in terms of as you’re looking at how did I do, let’s say in Q4, it’s worth kind of maybe taking a holistic view, maybe not just laser focusing on let’s say the holiday here, looking a little bit more holistically because, as Kyle mentioned, Amazon was incentivized, we don’t want to overload our fulfillment centers. We want to push people to shop earlier and people were shopping early. I mean, you’re [inaudible 00:15:39], and again, maybe obviously there’s an impact of the pandemic here, but people were going to these sites shopping at pretty high volumes, again vis-a-vis or in comparison to last year to the point where then when you get to the holidays, the volume jumping is high, but again, the raw volume that maybe you’ve seen over the course of the prior month was actually very positive and much higher than you would normally expect.
Andrew Waber (16:05):
This is again, a worthwhile caveat when you look at volume didn’t jump as much, but if that baseline was higher, that’s very meaningful and does help to contextualize that. CPC is a little bit more varied, right? Certain categories, the CPC increases were larger, toys and games obviously being a big example as compared to that jump again that we saw in 2019. In some right, where it’s outpaced, beauty and personal care is a good example where that CPC increase was smaller. Every category saw CPC increase. It’s just as compared to the CPC increase you saw last year during the same period, how does that compare? So bit more all over the map here, again depending on the category. I’d say, and Kyle, maybe you can add to this, you kind of see the categories where the CPC increase in 2020 outpaced what you saw in 2018, they tended to be categories that were, you could argue were related to kind of the what am I doing at home during a pandemic. So office products being a good example.
Andrew Waber (17:11):
I have a home office. My kids are doing homeschooling, I need more of office products or potentially electronics, whether they’re same purposes. Home and kitchen, obviously home improvement, that activity was very much year over year. Toys and games, obviously those are something that everyone you’re trying to get… I have a kid myself. You’re trying to keep them entertained while they’re home for longer periods of time. You’re going back for more and more toys after they get bored with one or another. You can see some of that reflected here. I don’t know, Kyle if you can maybe shed a light on that as well.
Kyle Barron (17:47):
Yeah. There are a couple of things really drive how much CPC has increased from the week before Cyber Week to Cyber Week. I think the biggest call-outs for me are in toys and games and electronics. They follow the same trend, which is they have a larger increase, a significantly larger increase from the week prior to Cyber Week in 2020 than 2019. I think those are the categories where you expect people to hold off on purchasing these items on Amazon until they know that those products are going on sale.
Kyle Barron (18:33):
If you’re planning on buying a laptop and they have websites now where you can get previews of what those deals are going to be leading up to that, there will be a higher demand for search volume and these sellers are going to want to be able to promote their products when they’re on sale because that’s the reason for promoting these is that they want to increase their sales volume. That’s where you see this year being more exaggerated than in 2019. Then you have categories like health and household and sports and outdoors where those are more categories where you might not be able to wait a week before you need a new shampoo. These are products that you might buy a little bit more regularly where you’re not expecting to wait for these products to go on sale, and therefore the jump might not be as large compared to the year before.
Andrew Waber (19:44):
That’s a great point. So you see this reflected here, and we’ll go into kind of other stats here, but I think it’s a great point that the way people shop for certain categories obviously differs, and you see that reflected here in terms of these changes. Let’s go into kind of, and I’ll leave this up for a while because honestly there’s a lot more to look at here. Again, what we looked at here was we indexed search volume. What you see is that 100%, when a line hits there, that was the top search volume over this period, daily search volume. Every other number there is expressed as a percentage of that 100%. For instance, you see that purple line on the bottom, electronics. It hits peak volume, that’s Black Friday right there, that big peak right in the middle. You can see for instance, that at the beginning of this graph, the volume as compared to Black Friday was roughly about 45% of that daily search volume on Black Friday.
Andrew Waber (20:53):
Again, we didn’t have every category here mostly because it would be maybe a little too hard to read, but we wanted to kind of put especially categories that are very popular typically during the holidays and ones that kind of demonstrated a little bit of different behavior. Electronics is Kyle mentioned, I mean, you really look at… It’s different you see than the other categories here. Big, big increases on Black Friday, Cyber Monday, and then the volume drops back down just a bit higher than what it was even before Cyber Week where volume was pretty low. Then you see certain categories, as we mentioned, where the peak volume actually occurred after cyber week. Toys and games is a good example. That’s a yellow line near the top where volume peaked around December 7th and it stayed. You look at that Black Friday or Cyber Monday level, it stayed right around there all the way up through kind of mid December.
Andrew Waber (21:55):
You have other categories, for instance, clothing, shoes, and jewelry that continued to decline. You see it kind of juts up a little bit during Cyber Week, and then continues to climb all the way through the 13th before dropping back a bit. You have certain categories and again, I’m sure Kyle can talk about this a little bit, but the way people shop for categories, especially during the holidays is going to be different because of, let’s say you’re doing gifts, what are easier gifts to get quickly? You’re thinking, again, toys being a good example where I can maybe shop a little later. The shipping time may be…
Andrew Waber (22:28):
I can look for something and get something a little bit last minute. Clothing may be another good example, and beauty and personal care, you see kind of have a similar path where search volume peaked after Cyber Week, stayed pretty high, again, really through the shipping cutoff. I mean, to the point where when you look literally on nearly the last day, you could get something to someone before Christmas. Roughly on December 20th, that volume for beauty personal care was pretty close to where it was on Cyber Monday. This really showcases how people shop for different categories and how that just reflects itself in terms of total volume. Kyle, I don’t know if you have anything that you might want to add here.
Kyle Barron (23:11):
Yeah. There’s a couple of more things that I want to point out. One of them is you’ll see the spikes are on weekends. For example, home and kitchen and toys and games spiked that weekend of December 5th, December 6th. That’s right where you would expect you still have enough time for that gift to ship and you have plenty of time to wrap it. The next peak that you see after that is with beauty and personal care, and clothing, shoes and jewelry, that spikes the very next weekend, so that would be the December 11th and 12th. Those are more gifts that are more popular as last minute gifts where you’re saying, “Oh, I need a last minute gift.”
Kyle Barron (24:14):
Maybe one of the grooming kits for men or makeup kit for women. Something that is easy and is for sure going to be a hit, that’s something that we are not surprised to see, but it’s important to know where your category is going to peak at, so that way you can take advantage of when those peaks are going to be and bid appropriately. Conversely, you see electronics has the lowest search volume level across any of these categories, and then immediately spikes way up for Black Friday. That tends to be because the average selling price for a product in electronics is going to be much higher than most of the other categories, so it’s definitely going to be weighted by things like monitors and laptops and computer systems. That’s why it’s really heavy for those periods where shoppers know for sure that they’re going to be able to get deals.
Andrew Waber (25:31):
Yeah. I think you brought this up, but I think this is something to really think about. I mean, electronics is a good example of a category where if you’re an electronics seller, it’s Cyber Week. That’s your time really to make hay because that’s when people are shopping or shopping in the greatest numbers by a significant margin. Conversely, and these categories that Kyle was mentioning like clothing, shoes, jewelry, beauty, it can be tempting because it’s Black Friday, Cyber Monday, obviously you know there’s going to be activity, but it’s important that when you’re kind of budgeting, save your proverbial bullets as it were. Don’t really just go for broke kind of for Cyber Week, which it can be tempting because there’s so many shoppers on the side, there’s so much you can possibly do, but really this kind of example as the fact that it’s you need to have that budget in play to address that volume after Cyber Week all the way leading up to the shipping cut off because especially in certain categories, you’re grabbing more and more people that are actually going to the site late and meeting those shoppers especially.
Andrew Waber (26:33):
Those are the types of shoppers if I’m shopping last minute, I’m probably even that much more likely to do less research. If I can get in front of someone at the top of the search, it’s going to be that much more impactful. Really consider this something as we get again, to high peak periods next holiday season, think about this a little bit, again, depending on your category, it matters less or more, but this really shows that it is a real trend here with folks and we saw this last year, but this year we definitely saw it across a little bit more categories where that peak volume was occurring a lot more often after Black Friday, Cyber Monday. This really brings up, it exemplifies this point. Every vertical is different on Amazon. The way people buy, that typical buying journey, that’s different, the seasonal differences, obviously we’re just looking at November, December, but you talk about sports and outdoors, obviously that is a very different seasonal buying patterns that toys and games, for instance.
Andrew Waber (27:35):
Those differences are there. Then competition level, certain categories you have, home and kitchen is good example, a tremendous number of different sellers. There’s some larger, some smaller, but a lot of different ones that have very wide variety of products that are very popular. You have somewhere there’s much smaller, big competitive set, right? It’s very different. The holidays are just part of that. The way you behave during the holidays, it reflects your vertical and it’s going to also impact how you’re thinking about the entire year. That’s why we just produced this exclusive new data that kind of brings that home, how this happens over the course of the year, not just during the holidays. For you folks here on the webinar, we’re showing it to you here first. We’re going to be publishing this soon, and everyone here that’s on the webinars is going to get a copy of this as part of the replay webinar. We’re going to, again, talk through a little bit of the state here, not everything, just a little bit, but then you can dig into the report itself once we send it along, again within next 24 to 48 hours.
Andrew Waber (28:40):
This is the advertising search and advertising benchmark report looking across multiple verticals, and specifically how these verticals evolved within 2020 over the course of the entire year, month by month, so you can kind of see that pattern, how user behavior changed, kind of advertiser behavior changed at a high level. Just a little bit about methodologies before we get into it. Again, as we talked about, these categorizations also based on ad groups. We looked at the ASINs within the given ad group, across Teikametrics’ clients, and then assigned these given ad groups based on the ASINs within those ad groups. It was trying a more granular type of categorization. This is again, based on analysis data all through the first 10 months of last year. We just talked about the holiday season, so we really wanted to focus on, let’s just focus on the non-holiday period, again really pre-pandemic all the way through the end of October. As we did in the previous graph, everything, we’re finding search volumes expresses and index rates. When you see something hit the one that is the peak volume for that category on a monthly basis, and then every other number for that volume is expressed as a percentage of that top value.
Andrew Waber (30:02):
So just keep that in mind as we look at this. We’re going to show four different categories here, and we picked these four out of this report, which has 10 because these categories had unique behavior patterns that were kind of different in their own way, and they kind of show how consumers were searching differently and how kind of advertisers responded a little differently. One thing, I know Kyle can kind of talk about this. I thought the one that was very, very interesting, you see a lot of categories as you kind of expect, right? March, April comes along, pandemic hits, search volume rises. What happened after that was really what separates a lot of these verticals because grocery and gourmet food is probably the most baseline example of that, right?
Andrew Waber (30:52):
It’s I can no longer go to the grocery store. I don’t feel safe going to the grocery store. I want to buy more groceries online, so you see search volume in March and April go up significantly, nearly double what it was in February from a monthly total perspective, and then it kind of tapers off a bit. Look at beauty and personal care, it starts going up March, April, and then really stays at a near peak level all the way through September. Kyle, I know there’s a lot and kind of as you looked at this, you kind of had some thoughts. I don’t know if you kind of want to dive into those a little bit and talk through.
Kyle Barron (31:25):
For sure. I want to start with beauty and personal care, and we put this in the top left because this was kind of our baseline case when we were looking at this information by vertical, which is there was a big jump in search volume from March to April that kind of maintained that plateau throughout the rest of the year. Specifically what happened with beauty and personal care is you can see that both conversion rate and CPC simultaneously dropped with the increase in search volume, and that’s due to a fundamental shift in the types of products that shoppers are buying online in the beauty and personal care category, so things like your basic essentials, shampoo, body wash, shaving cream. Those sorts of things became more popular to buy on Amazon because it’s not like you’re walking by a pharmacy or a store, or going into the grocery market to buy these products now.
Kyle Barron (32:41):
That’s why we saw a big jump in April and not in March. I know a lot of lockdown orders went into effect in March, but usually people have about a month or so supply of whatever they need, and that’s why we saw the big jump in April. The reason that CPC and conversion rate went down is that the average selling price of these products was lower because they’re not as weighted by some of the higher end beauty and luxury beauty products that Amazon has been pushing recently. That was kind of our base case, and we thought that beauty and personal care was a good way to express that change in demand. With grocery and gourmet, we see that it spikes almost instantly. Those are things that you buy on a weekly basis. There was also a lot of panic buying. I know that my wife and I were trying to be one of the ones to get flour as big of a sack as we can get from whomever we can get it because we already love making bread, but we really got into making bread over the last year.
Kyle Barron (34:01):
That was one of the products that we were really interested in. Then you kind of see it die down as the lockdown orders start to relax and grocery stores start to understand how they can safely reopen. The next spike that we… That spiked somewhere between March and April. The next spike that we saw is with sports and outdoors. This was the category that relative to 2019 didn’t change all that much, just because we saw that there was a spike when it starts getting warm in the Northern hemisphere, sometime in May, in June, that’s when we see search volumes rise. As those products are becoming more popular, people still want to get outside, people still want to purchase those products and shop for them online.
Kyle Barron (34:53):
We saw that spike right about when we would expect them to spike. Toys and games was interesting because there wasn’t necessarily a single spike that we can point to. It was the steady increase in search demand where depending on who these people are, they have different tolerances for how long they can go without new toys or new games. I know Andrew was just mentioning his young daughter’s threshold for when she gets bored of new toys, and so that’s why we don’t see a single spike. We see this steady increase that peaked around when we would expect them to peak, which is August which is popular for back to school and educational toys and games there.
Andrew Waber (35:50):
Yeah. I think you look at this as we talk about each category being different and despite all the pressures of the pandemic obviously being pervasive, the way people shopped in response to that varied by vertical and you had some trends again between categories that are consistent, but then others where it’s not the case. You’ll see this as you kind of look through the full report, you’ll see some commonality between verticals and you’ll see some big differences. What I hope is kind of as you look at this report, it should kind of give you a good bearing when you look at your own statistics is how did I match up with kind of this market wide trend? Were you outpacing it in some ways, were you kind of ahead of this?
Andrew Waber (36:38):
Again, this is looking category wide, so obviously there’s different subcategories of this that may behave differently obviously, but this should be a good way for you to kind of look at your own performance and lightly benchmark it against a larger category, kind of give yourself a good thing to go on and you kind of look next year because as I mentioned, the trends that we saw this year, it’s not going to be identical or this past year rather than 2020. What happens in 2021, it’s impacted with what everyone went through. Habits that people got into around certain categories in particular have become ingrained to some respect, people that, let’s say older folks that were not as used to shopping online, let’s say for household goods became more adept at it and became used to it, and yet some of those people are going to go back and buy in store when it becomes safe, et cetera, but a healthy percentage of these people are going to say, “Hey, you know what, that was pretty convenient. I want to keep doing that.”
Andrew Waber (37:42):
Some of the trends that you saw this past year are going to remain, they’re going to recede a bit, but again, don’t anything to go back to what you saw in 2019, and then conversely 2020 was an outlier, but it should give you a really good clue about where things are going and what baseline we’re essentially retreating from a little bit. Again, as I mentioned, we’re going to send you a link to this full report within our follow up email, so keep an eye out for that and you kind of read through it. We’d love to hear your questions too as you read through, love to hear what you think. As we mentioned, this holiday season was different. What are the lessons you should take from it? The first is relying on priors. Obviously it’s helpful, but it should be taken with a grain of salt as you’re kind of setting your strategy a little bit because as I mentioned, COVID it’s going to continue to change how consumers shop.
Andrew Waber (38:42):
Even if by the time we get to the next holiday season, life, as we know it, has maybe returned to something resembling what we had in 2019, all these habits that folks got into during the pandemic are not going to go away overnight, and a lot of cases they’re going to potentially remain permanent, they’re going to change in some way. The priors that you saw this past year are helpful, but don’t take them as gospel and don’t take 2019 priors as gospel either. There needs to be able to, as it says in the second bullet here, ability to quickly respond to changes as they happen, particularly from an advertising perspective. If you’re stuck on, I know this is the best moment for my category and I’m going to bid up and that’s just the way it’s always been, you’re likely going to be caught flat-footed if things change. An example here is, and this something our bidder does, is we’re seeing more conversions happen and we’re seeing a steady or even rising conversion rate, let’s say on a given keyword, I want to get more aggressive on that keyword because that means consumers are responding.
Andrew Waber (39:49):
They’re responding to my ad, they’re shopping in greater numbers. I want to be able to get more aggressive. Going based on conversions and conversion rate, you’re going to see those a lot sooner than you’re going to see, let’s say ACOS and ROAS, which is a little bit more downstream. It takes longer to get those metrics. Making changes based on these more front-loaded as they were metrics, it’s going to put in a better position quickly. Again, this is something our bidder does just because it is a good practice today and it works. As we mentioned with the line graphs you saw earlier, be really cognizant. When we get to that Cyber Week happens, save your bullets a little bit. That post-Cyber Week shopping period can be very, very busy and even busier than Cyber Week in some ways depending on the category. So keep that budget on hand, understand that it’s a major, major factor in terms of how people consider shopping, and this this past year, maybe even be more of a factor because it’s easier for me to do shopping late because while I’m on my computer anyway, it’s easy for me to shop in that case. I don’t have to really back data. So worth keeping that in mind, and I don’t know if Kyle, you have kind of anything to build on here.
Kyle Barron (41:09):
Yeah. I think going into Q4 this year, like what Andrew was saying, it’s not going to look the same as it did in 2020. I would absolutely expect some of the promotion scheduling and trends to continue, like Amazon pushing promotions to be spread out a lot more smoothly over the holiday shopping period to avoid strain on fulfillment centers. I would also expect getting the product shipped to those fulfillment centers earlier and earlier. I expect those trends to continue. One of the things that we will continue monitoring are these conversion rate, CPC, search volume trends across those categories, and see if this year is going to look more like 2019 or is it going to look more like 2020, especially as vaccine rollout happens and we start to see a relaxation of lockdown orders.
Kyle Barron (42:37):
The most important part of all of this is understanding that the market will continue to be volatile. We’re going into, just like we went into an unknown scenario in 2020, we’re still going into an unknown scenario in 2021. The more agile you can be with making decisions with regards to advertising and marketing your products and promoting your products and planning for inventory, it’s important to be confident that you have the right tools in place so that when you do see a shift in the market, that you’re able to react quickly, that you’re able to react accurately because that could mean the difference of missing out on peak periods of demand or it could mean overshooting your budget too soon when the peak demand times are yet to come.
Andrew Waber (43:46):
Yeah, great point. With that, I think we can get to questions. We had a few coming in, and again, if you have questions now, feel free to get them in as we go. I think we’ll go through some of them here. Clarence here asked, what’s the average ACOS for the sports and outdoors category? That’s something we didn’t specifically study as part of this, mostly because especially as you get to these larger really top level categories, that’s going to really depend on your business model, what you’re selling, et cetera. Now, if you get to a subcategory level, I think in an ACOS comparison could make sense because then you’re getting into the point where you’re selling similar products at theoretically similar margins, et cetera, so that might be a better measure, but when you’re looking at these top level categories, we really wanted to focus on top level metrics specifically because there’s such an array of products, even the categories we looked at.
Andrew Waber (44:45):
Beauty and personal care, there’s everything from a deodorant in some cases to high-end perfume, and your ACOS and ROAS can be vastly different just because the nature of those two businesses. However, it’s still relevant to especially look at overall volume, conversion rate in terms of what to expect, but we kind of shied away from that just because we thought the comparison really wouldn’t be instructive. If we ever drill down to kind of subcategory level, maybe we can have that conversation, but it’s kind of more about… Again, the desire was to kind of give you the best information about what’s going to give you the best guidance rather than kind of point you in a direction, which may not be relevant necessarily to your individual businesses. I hope that it’s helpful a little bit.
Kyle Barron (45:34):
I wanted to address a question from Todd who asked if toilet paper and paper towels are in the beauty and personal care category. Those products are actually in the health and households category. We chose not to include it on the slide of the year long 2020 trends because it was somewhere between the immediate spike in demand that we saw for grocery and the month long lag in beauty and personal care, but we did see that the graph looked very similar to beauty and personal care, but the spike in demand happened between March and April and it wasn’t as distinct as those two. We made the choice to not show that in the graph, but that’s a very, very good point. That was the number one search term for all of Q2 in 2022 was toilet paper. Many products stocked out there, but the trends were pretty similar to beauty and personal care just with the spike happening a little bit later than where we saw the spike for grocery. Good question.
Andrew Waber (46:59):
Yeah. Todd, to that point, when we send you the full report, you can see the health and household category in there, which does include toilet paper as an example, so you would see that reflected in those numbers. Laura had this interesting question to see how this trend lines compared to 2019. Now, in the context of the benchmark report, we don’t have that. However, regarding the trend lines around November all the way through the shipping cutoff that we showed earlier, we actually do have those trend lines because we do that in a report roughly about three, four months ago. I believe we linked to that report within the holiday report. Laura, I’ll try to follow up with you offline if you want those, just so I can send you that specifically. I can shoot you an email with report just so you can basically see those lines in 2019 within the holidays. Again, as I mentioned, you saw some categories again, had that post-Cyber Week bump, so others where Cyber Week was really the big time, but you can see those and kind of how they look year over year generally.
Kyle Barron (48:24):
I wanted to address two similar questions. I’m not sure if it’s pronounced Gillian or Gillian, I apologize, but the questions were around the point I was just making around being reactive to these changes in the market that you’re able to quickly implement changes to bids or be really reactive on keywords during times of maybe it’s peak seasonality, or maybe you’re winding down for your peak seasonality. How do you make sure that you are making the right decisions when that time comes? That’s really what Teikametrics Flywheel is built for. We use advanced data science algorithms that monitor keyword performance over time, and then be able to predict what the value is going to be for all of those keywords, given a baseline understanding of your products. That means knowing how much your product sells for, what’s the conversion rate that you expect on those products.
Kyle Barron (49:49):
Knowing what your pre-ad gross margin is, is really important to know how much you have left over to spend for advertising. All of those factors go into our software that then changes bids constantly. We’re constantly monitoring the metrics that are coming in for every single keyword in all of your campaigns and all of your products to say, do we need to make an update on this bid, is $0.75 for this keyword, is that the right bid given the new understanding that we have for this product, so that if you see that we’re getting a higher conversion rate for this product, that means for every sale or for every click that we’re generating from an ad, we’re actually getting more revenue, and so therefore we can increase the bid on that keyword and acquire more traffic. It’s always a balance between volume of sales and efficiency of your advertising strategy. What Teikametrics is excelling at is being able to strike the exact inflection point of balancing both of those metrics, so that way you can maximize sales while still maintaining a level of profitability.
Kyle Barron (51:20):
That partially goes into why we didn’t include average ACOS in these analyses and in today’s presentation is because every business is going to have products that have different margins and different goals, so you’re going to have a much higher ACOS for products that are brand new, versus products that have been sold on Amazon for a decade. Those factors are unique to each business. What our software is really good at is making sure that we take into account what your needs are as a business looking at every single product individually, and then being able to react to those market trends as they’re occurring instead of a week later or a month later or a quarter later because all of these calculations are being done in real time, and so that way you can always stay on top of whatever those market trends are, whether it be ramping up for your peak seasonality or ramping down, or a new competitor introducing a product and them being really aggressive with launching that product. Having a tool like Teikametrics Flywheel at the ready is going to help you continue succeeding in these times of volatility and uncertainty.
Andrew Waber (52:52):
Couldn’t have said it better myself, Kyle. I know we’ve kind of teased the benchmark study, which again, I’ll be shooting out to everyone with the replay. We also have another study coming up that really looks at precisely that, which was Teikametrics bidder impact on both small businesses and large businesses, kind of looking at these two 60 days prior to starting and 60 days after. I mean, there’s a meaningful difference when it comes to sales, and it’s really because we are helping businesses match their bid strategy to what they’re trying to do with a given product and the competitiveness of their category in Amazon to meet their goals and grow their business in a manner that fits what they’re looking for. That’s coming a little bit later.
Andrew Waber (53:43):
I’m getting a little bit ahead of myself, but definitely very excited about that one. I think that’s just about all the questions we had, so we can add a couple minutes early. Again, thanks everyone for joining. You’ll be getting a recording of this presentation along with the slide deck, and then additionally, a copy of that a year long 2020 benchmark report that we teased here. You’ll have that in that replay email, and again, Laura, I’ll follow up you individually with that 2019 data, just so you’ve got that and you can do some sort of comparison with yourself. With that, I think we can wrap up. Thanks again for joining. Thanks, Kyle, for hopping on this. This was awesome, and hope to see you all again on the next webinar. Have an awesome rest of your day.
Kyle Barron (54:29):
Thank you everyone, and stay safe out there.