2020 is proving to be a year of significant changes for our industry and society — but we continue to feel positive about the future of monetization and look ahead to new opportunities for publishers.
With the significant increase in online shopping and home delivery, the time is right for eCommerce retailers, online marketplaces, recipe services, and delivery apps to drive new revenue with sponsored listings.
This article will dive into what sponsored listings are, how you can use them, and why now is the time to integrate them into your sites and apps.
What are eCommerce sponsored listings?
Sponsored listings are ad units that allow vendors/sellers to promote their organic listings in search and browsing results, homepage carousels, emails, and more. Unlike banner ads, sponsored listings are native ads that complement your organic spots for a non-intrusive ad experience for users.
You find these listings on sites like Amazon, Etsy, and eBay — where the sponsored products are listed first in the results.
In the below example, the sellers of each airpod listing are bidding to appear high-up — providing a high-margin revenue stream for eBay.
Why now is the right time to use eCommerce sponsored listings
Simply put, increased website/app traffic can equal increased ad revenue.
And if you’re seeing an uptick in visitors to your site/app right now, you’re not alone: Quantum Metric in March cited a 52% YoY increase in revenue growth for eCommerce retailers. Similarly, according to the Wall Street Journal, at the beginning of March eCommerce accounted for about 16% of US retail sales; by the end of March, that had jumped to 20%.
In other words — it’s the right time for eCommerce sites to use sponsored listings because traffic volume is up — and will continue to rise in the coming months.
Additionally, sponsored listing revenue is based on traffic — not directly linked to sales. If users are browsing (and clicking on products) but not in the mood or situation to buy financially, you still get paid by the advertisers. This helps to hedge your revenue bets: even if users aren’t purchasing high-priced items like they used to, you are monetizing those individuals.
And finally, if buying is moving from brick-and-mortar to digital, then the vendors who rely heavily on in-store sales (such as prime in-store locations and eye-catching packaging) may not see those sales translate to online orders.
This means that these sellers may be itching to regain those lost sales, and a sponsored listings program — where they can pay to be #1 in search results for relevant keywords — is one way to do that.
For example, as Best Buy’s in-store sales decline, their vendors will be forced to move their inventory online — on their own sites/apps, through eCommerce retailers like Best Buy, and even through eBay, who offers a sponsored listings product.
As you can see below, coffee vendors are paying eBay to appear as a top result for a search of “coffee maker” — but they are not doing the same when you do the same search on Best Buy. This is a lost opportunity for Best Buy; there’s no reason AdirChef wouldn’t also allocate resources to Best Buy for the same opportunity.
Who’s best suited to build a sponsored listings platform this year?
Some types of eCommerce brands that could benefit include:
For instance, an eCommerce retailer like Petco could offer sponsor listings in, say, its Pet Food subcategory. It could entice brands like Blue Buffalo to pay to ensure their products are in the top spots.
Many brands already do employ native sponsored listings, including eBay and Etsy. For example, an Etsy search for “soap” displays four sponsored listings at the top of the page.
As more people cook at home, more people will be searching for recipes. Allrecipes.com, for instance, includes sponsored listings for grocery stores, as seen below. This listing is tied to a deal on Challenge Butter (under the butter ingredient) that can be redeemed only at the local Food Lion.
Food delivery services
Given the home cooking, it’s also proven to be a boon for grocery retailers and home delivery services. A new Brick Meets Click/Shopper Kit consumer survey shows that 31% of US shoppers have used an online grocery delivery or pickup service in the past month — a 240% increase from August.
Winners here include Drizly, the alcohol delivery platform, who is seeing a 500% increase in sales from new customers, as well as Walmart Grocery and Instacart — whose apps have seen a dramatic pickup in downloads in March.
These services could include sponsored product listings so that brands like Coors, Kraft, and so on appear high-up for relevant searches as users search for groceries. To date we have not seen any grocery delivery service adopt sponsored listings.
Restaurant and meal kit deliveries are also on the rise according to recent search data from SEMrush, which cites double- and even triple-digit increases for these services.
One of the platforms shown above, Uber Eats, offers in-app sponsored listings to local restaurants looking to boost sales with special offers. A user searching for Italian restaurants could see the sponsored listing below along with other local options without special offers.
Uber Eats already touted a 50% increase in food orders for its advertisers from July 2018 to January 2019. The new, increasing demand for home delivery will further incentivize these businesses to pay for promoted listings — boosting Uber Eats’s advertising revenue. Any similar brand not doing this is leaving a high-margin revenue stream on the table.
Where can I sell sponsored listings?
Sponsored listings are highly flexible ad units that can drive incremental revenue everywhere your users are.
While we’ve spoken mainly about the search result use case, they could be added anywhere, including:
For example, a retail platform like Slickdeals can display multiple sponsored listings in the high-value, above-the-fold, “Featured Deals” section on its homepage. Here, Chase, Verizon, REI, and others pay Slickdeals to be highlighted.
That sponsored listing for REI then takes users to Slickdeals landing page with discount details.
Submarino, an eCommerce site for home electronics, also displays sponsored listings — but in their highly-visible homepage carousel.
The potential revenue of building a sponsored listings platform
Using Instacart as an example, let’s say HoneyLove, a fictional honey brand, normally sells 20K jars at $10 each every month at Publix stores. As people stay home and order digitally through Instacart, they’ve seen total sales plummet — and they realize it’s because they’re listed #12 in a search of “honey” on Instacart — too far down to be noticed (in-store, however, they have great placement).
Now let’s imagine Instacart offered a sponsored listings product where vendors could pay $10 CPMs (cost per thousand impressions) to be the #1 search result for any term. HoneyLove jumps at this opportunity and signs up. After a month they see these results:
|Searches for “honey”||1 million|
|Total cost for HoneyLove||$10,000|
|New HoneyLove sales||15,000 units @ $10 = $150,000|
This reflects a huge win for everyone involved. Instacart is now making $10K/month from this single vendor (who they’d otherwise make $0 from); HoneyLove’s sales return to what they were (albeit for a relatively minor ad spend); and the app’s user experience doesn’t need to change — keeping users happy.
How to integrate sponsored listings into your site
Building a sponsored listings platform takes time and resources, given everything you need to build: ad pacing tools, revenue optimization algorithms, reporting features, forecasting tools, and more. You’ll also need to ensure your server can scale with advertising demand and is compliant with the GDPR, CCPA, LGPD, and other privacy laws.
Several of the sponsored listings platforms we’ve cited — including Amazon’s, eBay’s, and Etsy’s — took those publishers years to build in-house with large engineering teams.
Luckily, retailers can launch far faster by outsourcing their tech and vendor relationships.
|Widget Ad Networks: Promote IQ (Microsoft) & Criteo||Relatively easy to launch||Slow, little customization, and listings don't blend in|
|Ad serving APIs: Adzerk||Suite of APIs that make it easy for developers to build a sponsored listings platform in just weeks||Requires a technical integration|