As we gear up for Q4, analyzing Amazon and Walmart’s Q3 performance reveals valuable insights about current trends in advertising efficiency, cost-per-click (CPC), conversion rates, and overall marketplace health. Laura Pattison, data expert at Teikametrics, joined us to discuss these metrics in detail, providing a glimpse of what brands can expect in the critical holiday shopping season and insights that could influence 2025 strategies. Here’s a snapshot of what we learned:

1. Cost Per Click (CPC): Rising Competition on Both Platforms

• Amazon’s Premium: Amazon continues to command a premium in CPCs, reflecting its more competitive landscape. CPCs have trended upward, with Amazon’s CPCs 40% higher than Walmart’s in Q3.

• Walmart’s Steady Increase: Walmart saw a notable 22% rise in CPC over the past four quarters, which indicates that while Walmart remains more cost-effective than Amazon, competition is intensifying.

2. Conversion Rates: Walmart Outpaces Amazon

• Strong Walmart Performance: Walmart’s conversion rate outpaced Amazon by 42% in Q3, a testament to the marketplace’s efforts in boosting online shopping engagement. Shoppers are not only browsing but are increasingly comfortable purchasing directly on Walmart’s platform.

• Stable Amazon Rates: Amazon’s conversion rates have remained steady, rising just 5% in Q3 year-over-year. This steady conversion rate despite increased CPC suggests a well-optimized platform, but one that could benefit from ongoing enhancements in targeting and bidding strategies.

3. Average Order Value (AOV): The Economic Influence

• Lower Spending Across the Board: As expected, AOV on both Amazon and Walmart saw slight declines, reflecting shoppers’ caution amid economic uncertainty. Amazon’s AOV was approximately 30% higher than Walmart’s in Q3, highlighting the different consumer spending patterns on each platform.

• Inverse Relationship with Conversion: There’s an interesting interplay between AOV and conversion rates. As AOV decreases, conversion rates often rise—a pattern we’re observing on Walmart as consumers find value-driven options more appealing during tougher economic times.

4. Advertising Efficiency (ROAS): A Challenging Environment

• Decline in Efficiency: Both platforms faced a decline in advertising efficiency in Q3 as CPC rose and AOV decreased. Walmart’s efficiency declined by 16% compared to last year, while Amazon’s declined by 7%. Nonetheless, Walmart’s return on ad spend (ROAS) remains almost double that of Amazon’s, reinforcing its appeal for brands seeking cost-effective advertising.

• Key Takeaway for Brands: With CPC on the rise and efficiency on the decline, strategic bidding and budget allocations will be essential for maximizing returns in Q4.

5. Strategic Considerations for Q4 and Beyond

• Prioritize High-Value Products: Laura suggests focusing on high-value and high-opportunity products, categorizing them into tiers to allocate budgets and bids effectively. With rising CPC, understanding which products drive the most value can help brands optimize spending and maintain efficiency.

• Refine Bidding Strategy: Given the increase in CPCs and the impact on efficiency, brands should consider refining their bidding strategies—especially on Walmart, where CPCs are growing but remain more accessible than Amazon.

• Explore New Ad Tools and Formats: Both Amazon and Walmart continue to release new tools that help brands better target and engage shoppers. Brands should stay updated on these features to capitalize on new ad formats and bidding adjustments as competition intensifies.

Final Thoughts

Q3’s data points indicate both challenges and opportunities for brands. While rising CPC and lower ROAS signal a need for careful budget management, the continued growth in Walmart’s conversion rates and Amazon’s stability underscore the resilience of both marketplaces. As brands gear up for Cyber Weekend and the end-of-year holiday push, insights from Q3 offer a strategic foundation for driving growth in an increasingly competitive landscape.

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