Introduction
Success isn’t just about growth. It’s about sustainable growth. So, to achieve true success on Amazon, brands need to look beyond short-term sales metrics and build a comprehensive marketing strategy that addresses the entire purchase journey. This full funnel approach can effectively balance immediate conversions with long-term growth.
Understanding the future demand principle
James Hurman’s Future Demand (2022) perfectly captures this principle, and changes how brands should approach their Amazon marketing strategy. It highlights how while only about ~10% of potential customers are actively shopping in any category at a given time, the remaining ~90% represent future demand. The most successful Amazon sellers recognise that brands who only target people ready to buy now are in effect limiting their ability to grow in the future.
Looking at the data:
- Only ~10% of people are ready to purchase now
- The remaining ~90% will enter the market later
- Most shoppers choose brands they’re already familiar with
The growth efficiency challenge
WARC and Tracksuit’s Growth Efficiency report (2023) reveals a clear pattern when brands scale on Amazon:
- Initial growth comes easily by capturing a fraction of existing demand from customers who are confident making slightly riskier purchases from brands they’re not familiar with
- Once monthly revenue reaches approximately $300,000 (US market), growth becomes inefficient without broader brand awareness
- Higher advertising spend delivers diminishing returns for brands with low awareness
The data shows that high-awareness brands (>51% awareness) generate significantly more sales growth for each increase in onsite advertising spend compared to low-awareness brands (<10% awareness). The higher awareness brands also have a much higher ceiling before increased onsite spend becomes inefficient.
The 60/40 budget allocation framework
According the ‘The Long and the Short of it’ by Les Binet and Peter Field, the recommended starting point to balance immediate sales with sustainable growth is:
- 60% of marketing budget focused on creating future demand (targeting the ~90% not currently in market)
- 40% on converting existing demand (targeting the ~10% currently in market)
This applies to a brand’s overall marketing mix, not just its Amazon advertising mix, and should be adjusted based on specific category dynamics and brand maturity.
Implementing a Full Funnel Strategy on Amazon
The 60/40 budget allocation serves as an excellent starting point. But we need to look at how it translates to actual marketing activities on Amazon. So, let’s explore how to put this framework into practice through Amazon’s diverse marketing channels.
Amazon doesn’t just offer onsite advertising opportunities, it offers a range of channels to create an effective marketing strategy that leverages multiple channels to address people that are at different stages of the purchase journey, including those not currently actively buying:
Path to purchase insights
While understanding these channel-specific metrics is vital, the true power of Amazon marketing lies in how these elements work together throughout the purchase journey. Amazon Marketing Cloud (AMC) data provides valuable insights into exactly how these touchpoints interact to drive conversions, and reveals that successful customer journeys typically require multiple touchpoints across different ad formats.
Various customer paths show different performance metrics:
- Paths that begin with DSP tend to deliver higher RoAS
- Paths that include video elements often generate more new-to-brand customers
- Sequences that combine display, sponsored products and sponsored brands create a balanced approach
Beyond Amazon: channel synergies
These multi-touchpoint journeys not only drive sales on Amazon itself but extend far beyond the platform. Research by Analytic Partners (ROI Genome, 2023) shows Amazon advertising drives sales both on and off the platform:
- 45% of the overall impact from Amazon display ads occurs on non-Amazon channels
- 23% of the impact from Amazon sponsored search ads happens off-platform
This cross-channel effect creates additional value for brands with an omnichannel presence.
Conclusion
For brands committed to long-term growth on Amazon, a full funnel marketing approach is essential. By strategically allocating resources across awareness, consideration, conversion and loyalty initiatives, brands can build the familiarity needed to capture future demand while efficiently converting customers who are ready to purchase today.
