3 Questions to Ask If You’re Considering Buying an Amazon Ad

We’re now entering the era of the 'tripoly'

If you can't beat Amazon, maybe join them and advertise through their platform?
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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.

However, far too many brands are failing to bid on mentions of their products in premium publishers, allowing shoppers who read these endorsements to purchase them from Amazon or other third-party retailers carrying the item. Amazon, in particular, dominates, driving 20 percent of its overall traffic from referrals to the tune of 650 million shoppers every month.

This is a massive missed opportunity for brands to direct a customer who has shown high purchase intent to their website where they can own the customer experience. Inspiring serendipitous purchases is perhaps the last core advantage brand websites have over Amazon. Own it.

What is the long-term risk of giving Amazon merchandising data on this item or category?

Put another way, what are the broader implications of giving the company that owns Relentless.com access to anymore free data about what consumers like to buy?

Once a customer knows they can buy your product on Amazon, consider the chance of them shopping with you directly is good as gone.

If you’re a growth marketer tethered to an ROI goal, purchasing Amazon ads is a no-brainer. However, for a CMO looking five years out on the horizon trying to determine his brand’s place in the world, the equation is far less simple. Long term, Amazon has shown a hand that suggests it doesn’t only want to disintermediate agenciesit wants to disintermediate brands, too.

For some brands, particularly those that sell commoditized goods, the long-term risk is clearly mitigated by short-term gain. When it comes to straightforward items like batteries, there isn’t a ton about merchandising for Amazon to learn from engagement on Energizer ads. But as Amazon expands its own labels into far more intricate categories like apparel, engagement on brand advertising might help style your next Amazon essentials polo.

In particular, Levi’s, Dockers and Under Armour are investing aggressively in Amazon ads, providing a wealth of information on which colors, styles and price points garner consumer attention. As Amazon grows its clothing line, they essentially now have the blueprint for Amazon Basics blue jeans and performance heat gear. If I’m Levi’s, I’m taking all of that money out of Amazon ads and making sure I appear in a PLA for “best blue jeans,” a search pattern that has grown more than 80 percent in the last two years according to Think by Google.

Beauty companies in particular should also max out Google spend before even considering Amazon. Thanks to continued innovation at Ulta and Sephora, beauty has endured as perhaps the last Amazon-proof category. But as L’Oréal ramps its spend on AMG, Amazon gains valuable insights to predict beauty trends. It’s paying off: Amazon beat rivals in merchandising for the Korean beauty category and is starting to introduce exclusive products to hook shoppers.

If marketers take one thing away from Amazon’s conquest of media, it should be that the word duopoly must disappear from our lexicon. The era of the tripoly is in full force, and how to interact with this club’s newest member is among the most important decision facing brands in the months and years to come.

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