Le Jeu de la Publicité: Assessing the Most Effective Ad Types on Amazon in France
Article by Nadine Koutsou-Wehling | June 15, 2023
Digital retail media advertising describes the promotion of products and brands through eCommerce platforms by leveraging insights into consumer behavior and demographics to deliver personalized ad relevance. In addition to being the biggest retailer and marketplace in the Western world, Amazon also operates the largest retail media network. As a result, the company can offer clients a coherent evaluation of the success and cost-effectiveness of their ad placements based on KPIs such as ACoS (Advertising Cost of Sale), CPC (Cost-Per-Click), and CTR (Click-Through Rate).
In this article, we examine the median KPIs for the three retail media ad types on Amazon in France to assess which ad types are most relevant in the country and which are working most efficiently in terms of cost and profitability.
Sponsored Products and Sponsored Brands Offer the Most Favorable Median Values, Sponsored Display Lags Behind in Efficiency and Relevance
France is the 7th largest market for eCommerce with a projected revenue of approximately US$91.7 billion by 2023, and Amazon is by far the largest player in this market with its amazon.fr domain. With revenues of US$5.1 billion in 2022, Amazon is far ahead of the second and third largest players in France, which are CDiscount with revenues of US$2 billion in 2022 and Veepee with US$1.8 billion.
The three ad types on Amazon are Sponsored Brands, Sponsored Display, and Sponsored Products. Sponsored Brands is an ad for a store page on Amazon that uses specific page designs and selected products to increase customer awareness and loyalty. Sponsored Display ads select customers based on their past research and shopping behavior. They are also designed to reach customers outside of Amazon on external networks. In contrast, Sponsored Products are ads on Amazon that promote products based on search terms. They are the most difficult to distinguish as ads because they appear along with regular search results and a small “Sponsored” tag in the upper left corner.
To assess the effectiveness of ad types, we first look at the ACoS, or the percentage of total ad revenue spent on ad costs. A high ACoS indicates lower productivity, as it means the ad expended more in relation to the total amount of revenue it was able to generate.
The data shows that Sponsored Display ads are the least productive in France, with ad costs accounting for more than a third of ad revenue at the country median. Sponsored Brands are in the mid-range, with ad costs representing 28.8% of revenue. Finally, Sponsored Products appear to be the most productive ad type overall, with costs amounting to 26.2% of the median ad’s revenue.
Sponsored Products is also the most expensive ad type in France, with a median CPC of US$0.54, far higher than Sponsored Display (US$0.38) or Sponsored Brands (US$0.35). The high cost here may be due to high demand from merchants for Sponsored Products on Amazon in France, which increases competition and consequently drives up prices.
Since we see that Sponsored Products also have the lowest ACoS in France, indicating a high profitability in the market, we will examine the CTR to see if the consumer response to Sponsored Products is correspondingly high. Click-Through Rates measure the share of users who have responded to an ad by clicking through to the product or store page, so examining this metric tells us how relevant an ad type is on a median level.
Indeed, we find that Sponsored Products ads have the highest median CTR in France, along with the Sponsored Brands ad type, both of which have a rate of 0.31%. As Sponsored Brands are the cheapest ad type in France, with an ACoS that is only 2 percentage points higher than Sponsored Products, they appear to be similarly attractive in terms of cost effectiveness and relevance. Sponsored Display lags further behind, as it is neither particularly relevant with a CTR of 0.22%, nor does it excel in terms of affordability (US$0.38) or efficiency with the highest ACoS of all ad types.
Sponsored Products Provide Relevance and Profitability for a High Price, While Sponsored Brands Are Cheaper With Slightly Lower Effectiveness
With revenues far outpacing its competitors, Amazon holds a substantial position in the French market, which warrants an examination of the median performance of the three ad types on the eCommerce platform.
Looking at the three KPIs - ACoS, CPC, and CTR - we see that Sponsored Products and Sponsored Brands are the most relevant to consumers, with equal CTRs of 0.31%, leaving behind Sponsored Display with 0.22%.
Sponsored Products is the most expensive ad type per click ($0.54), but it is also the most profitable, with the lowest ACoS, where 26.2% of median ad revenue is ad cost. On the other hand, Sponsored Brands is the cheapest ad type with a CPC of $0.35 and only a slightly higher cost share of total ad revenue at 28.8%.
Not only are Sponsored Display ads the least relevant, they are also the least efficient, with the highest ACoS of 35.3%. While they are only 3 cents more expensive per click than Sponsored Brands, their performance metrics show that the other ad types deliver better results in the French market.
Sources:
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