The news: Amazon Prime Day created the two highest-volume sales days in Amazon’s history last week, but participating brands’ profit margins thinned due to steep advertising costs. Sellers spent 14% of their Prime Day revenues on Amazon ads, according to data from Momentum Commerce.
Behind the stats: Prime Day has become more than a retail event for Amazon. The multiday discount period pressures Amazon merchants to spend heavily on advertising, making it a pillar of Amazon’s ad business, which will generate $34 billion in the US this year.
The costs: Even with better ROI, advertising during Prime Day is an expensive endeavor with no guarantee of results. This year, costs were higher thanks to new ad formats Amazon pushed on to sellers. But in exchange, Amazon helped with out-of-ecosystem exposure.
Our take: Prime Day continues to grow as a powerful advertising force with each year. This year’s event was the first mostly untarnished by pandemic-related logistics issues like supply chain shortages, and Amazon capitalized on the number of brands eager to get back into consumers’ baskets. Programs like the out-of-network advertising subsidies will help Amazon build relationships with brands that could get them to focus even more heavily on the event.
One Liberty Plaza9th FloorNew York, NY 100061-800-405-0844