Digital brands must focus on customer acquisition for sustainable growth: Amazon Ads study

Digital-first brands looking to scale from thousands to millions of customers must prioritize systematic new customer acquisition strategies, according to a comprehensive study released by Amazon Ads. The research reveals that growth brands derive 68% of their revenue from new customers; a 10 percentage points higher than established market leaders.

The study, titled ‘Moving from 1,000 to 1,000,000 Customers,’ provides a strategic framework for digital brands navigating customer acquisition in India's dynamic consumer landscape. With 84% of Indian consumers actively seeking new brands and products, the research identifies significant opportunities for ambitious direct-to-consumer companies.

The Double Jeopardy Challenge
Drawing on Byron Sharp's acclaimed work ‘How Brands Grow,’ the study explains why smaller brands face a “double disadvantage”: fewer customers and lower customer loyalty rates. This creates higher dependence on new customer acquisition compared to established players who benefit from stronger repeat purchase rates.

The report states that “Growth brands need a higher focus on customer acquisition,” highlighting that challenger brands must compensate for lower repeat rates by continuously expanding their customer base to achieve market share growth.

An Always-On Acquisition Strategy
Contrary to seasonal approaches, the research demonstrates that Indian consumers explore new brands year-round, with only modest spikes during festive periods (+3%) and new product launches (+10%). This finding suggests brands should maintain consistent acquisition efforts rather than concentrating spend on peak periods.

The study identifies two distinct customer cohorts:
- New to Brand (N2B) customers – who buy in the category but not the specific brand
- New to Category (N2C) customers – who haven't purchased in the category at all.
The relative importance varies significantly by sector, with established categories like grocery showing higher N2B ratios, while emerging categories like luxury beauty demonstrate higher N2C proportions.

Three-Pillar Strategy Framework
Amazon Ads proposes a comprehensive three-pillar approach to address key customer acquisition challenges:
- Educate: Building awareness and understanding through value proposition communication, leveraging immersive video formats and product demonstrations to convince potential customers.
- Connect: Establishing credibility and relatability through authentic voices, customer reviews, influencer collaborations, and lifestyle integration to overcome trust barriers.
- Drive Action: Maintaining always-on presence across key touchpoints, capturing high-intent audiences, and winning crucial moments like festive seasons.

Proven Results
Case studies demonstrate significant impact when brands implement the full-funnel approach. LEGO Group achieved 163% sales growth and 53% category market share increase using integrated education, connection, and action strategies. Loop Earplugs generated 47x growth in branded searches while creating a brand new product category in India.

The research shows that brands utilizing all three tactics achieve 39% higher sales compared to non-advertisers, with each additional strategy layer providing incremental growth benefits.

Consumer Behavior Insights
Most importantly, the study reveals that 57% of shoppers choose products based on online visibility frequency rather than discounts alone, emphasizing the importance of sustained brand presence over price-focused strategies.

With retail media emerging as the preferred destination for new brand trials, favored by 88% of consumers, the research provides timely insights for digital brands seeking scalable, sustainable growth in India's expanding consumer market.