We’re running out of superlatives to describe the omnipresence of Amazon as the world’s largest online retailer is rapidly expanding its sphere of influence to the heart of Madison Avenue.
The “other” line of Amazon’s net sales, comprised primarily of Amazon Media Group and Amazon Media Services, will account for more than $10 billion in revenue by the end of this year. The high margin of ads, along with Amazon Web Services, has created a post-renaissance Amazon that now makes $1 million in profit every hour. And Amazon’s ad machine is growing beyond digital, with the $70 billion TV ad industry next in the crosshairs.
While most platforms take their best guesses at who you are, Amazon knows exactly what you buy, presenting tantalizing data for marketers that are desperately shifting ad spend down the funnel in search of ROI. But once a customer knows they can buy your product on Amazon, consider the chance of them shopping with you directly is good as gone.
To balance short-term revenue against long-term customer acquisition goals, here are the three core questions marketers should ask before launching Amazon campaigns.
Is the context on Amazon right for my brand?
Once the forgotten step-sister of the programmatic and big data era, context is roaring back into focus for brand advertisers. At Cannes 2017, New York Times CEO Mark Thompson famously called digital advertising “a nightmarish joke” for its over-reliance on audience buying at the expense of context. But thanks largely to GDPR, context is mercifully making a comeback.
In many cases, contextual targeting is a strength of Amazon. Brands reach shoppers close to the point of purchase and have the chance to steal customers searching for a competing label. But how much does the possibility of appearing next to a generic product or being in a cart with Gas-X hurt the brand premium that companies have spent years or decades cultivating? For brand safe contextual targeting, marketers would be wise to shift spend on premium items from Amazon to Pinterest, a perennially underappreciated long-term conversion channel.
Finally, as Amazon gets more aggressive in pushing sponsored products into the core UX, advertisers must be cognizant of how crowded real estate can get. Consider the search below that I recently ran for an “Oster Blender.”
This simple search was incredibly frustrating for me as a user, delivering one organic result that was actually an Oster blender alongside four ads. I left without making a purchase and a slightly annoyed attitude toward the competing brands that negatively impacted my experience.
What is the lifetime value for a customer who purchases the item I am advertising?
If buying a particular item is an entry-point to brand loyalty, stay far away from Amazon as an advertising channel for that product. Continue investing in driving consumer queries for these high-value items back to your website, even at the expense of some short-term revenue gains.
In the same vein, if an item is highly correlated with additional purchases, there’s no chance that I would promote that on Amazon. For example, if a shopper is searching for a specific brand of winter jacket, I want to give my recommendation algorithms a chance to try and recommend a hat and sweater to match the look in cart. With this in mind, Amazon may be allowing some sellers to link back to their own sites rather than Amazon’s product pages, but right now it is more a mystifying loophole than an established policy.
Reaching high LTV customers is the holy grail of marketing, but thanks to the commoditization of paid search, it is harder than ever. One emerging acquisition channel that has shown a direct correlation with high LTV shoppers is commerce content, made popular by the likes of Wirecutter, Best Reviews, Gizmodo and Allure.