Amazon is making its biggest bet this year on its annual sales palooza, turning the two-day Prime Day event into four days, from July 8 to 11.
Brands are preparing for a Prime Day sales spike by increasing ad budgets to promote their deals, and Amazon sales reps are trying to juice ad spend by making tailored recommendations to specific brands around the event.
Yet, brands are also more cautious this year compared to previous years, because of looming tariffs and a likely pullback in consumer spending.
“The length of the event is two times longer than it was last year, but that doesn’t mean all of our clients are doubling up on the volume of sales they’re expecting,” said Joe O’Connor, senior innovation and growth director at ad agency Tinuiti, which anticipates 10% to 25% year-over-year increase in Prime Day ad spend. “The economic environment is weighing on both consumers and brands.”
Amazon is asking brands to allocate a full month’s ad budget during Prime Day
In the weeks leading up to Prime Day, Amazon sales representatives briefed marketers on how much they should spend to promote their Prime Day sales to stick out from the clutter.
According to a pitch deck sent to an agency and viewed by ADWEEK, Amazon this year recommended that a brand increase their daily ad spend by 25% in the days leading up to Prime Day to build awareness and find new customers.
During Prime Day, Amazon recommended increasing daily ad spend by 100%. And in the days after Prime Day, Amazon recommended a 25% increase in daily budgets to retarget people who bought products, or people who looked but didn’t buy.
These recommendations amounted to a quarter of the brand’s monthly spend every day of Prime Day, the source who was presented the pitch deck said. Last year, this source spent 22% of their monthly budget on each of its two days, equivalent to 44% of their monthly spend.
Tinuiti’s O’Connor was not presented Amazon’s pitch deck but said that the budget breakdowns “are not terribly far off from what our team would recommend.” He added that budgets vary significantly for individual advertisers.
According to Amazon Ads, the recommendation in the pitch deck was tailored for a specific advertiser and does not apply to all advertisers.
A spokesperson for Amazon Ads said that Prime Day is “a proven opportunity to increase brand awareness, consideration, sales, and engender longstanding customer relationships,” adding that Amazon works with advertisers to develop Prime Day ad recommendations.
Too many sales make Prime Day less impactful
While some advertisers adhere to Amazon’s recommended levels of spending, others are buying ads away from Amazon, said Hillary Kupferberg, VP of performance media at Exverus Media. With retailers like Walmart and Target offering similar deals during Prime Day, competition for ad budgets is increasing, she said.
Some advertisers are also reluctant to splurge on Prime Day because the event is sandwiched between Fourth of July sales and back-to-school shopping, Kupferberg said. Consumers could be fatigued by the onslaught of deals.
“It reinforces how cluttered we are and how much competition there is,” Kupferberg said. “Everyone understands that it’s an uncertain economic time, but nobody is quite sure how that will play out.”
Mike Feldman, svp of commerce at Flywheel, suggested that the timing of Prime Day this year could help Amazon boost sales heading into the holidays, when some experts expect a pullback in consumer spending.
“Amazon is going to try to maximize their inflationary impact,” he said. “Shoppers have more time to make purchases—this is to make sure that they win Q3 and mitigate risk heading into the holidays.”
Brands also continue to heavily scrutinize their ad spend due to economic concerns.
“The ultimate thing that we’re hearing is that the ad budgets need to be more effective than ever before,” Feldman said.
He added that the payoff with Prime Day can be substantial for brands looking to get ahead of holiday sales.
“If you win Prime Day, you win ranking and could be competitive for the rest of the year,” he said.