As point of sale advertising becomes the next digital frontier for influencing purchase decisions, Amazon is poised to become the most credible threat to the Facebook-Google duopoly, and it is a platform where the digital media expertise marketers have honed will fall short. While there is always a learning curve for marketers looking to participate effectively on a new platform, this time there's a twist: They will need new skill sets and enhanced technology stacks to win.
With 35% of Amazon’s revenue being generated through its recommendation engine, which increases to 85% of purchases for voice commerce, it’s becoming increasingly clear that consumer purchase behavior is rhythmically moving toward a string of recommendations and ‘Amazon Choice’ defaults. It’s critical for brands to understand the bigger picture to market efficiently.
For advertisers to compete and thrive in this new environment, here are the five questions marketers should be asking:
1. What is my ‘digital shelf’ presence?
There are over 700 million products in the U.S. and more than 3 billion worldwide available on Amazon. Many of these get preferential placement based on Amazon Choice status, purchase history, Amazon’s private label brands, sponsored posts, and other triggers. For brands to compete, they need to have context to understand the broader picture of Amazon’s black box. For example, when a consumer searches for your brand, where do you show up on the page? What if the consumer is just browsing the category - say, "diapers" instead of specifically "Pampers" - How visible are your products?
"Presence at the point of purchase continues to be the strongest indicator of sales," said Bobby Figueroa, founder and CEO of Gradient.io, a technology platform that uses machine learning to help brands optimize their Amazon strategy. "In a world where hundreds of millions of products compete for space on retailers’ shelves, brands need to also understand a space that’s far more complex and less transparent - their ‘digital shelf’ - to inform how they build their ecommerce strategies and execute their programs."
Understanding how visible your products are as consumers are expressing intent is critical.
2. Who are my top competitors?
In Amazon’s marketplace, brands may be confronted with an entirely different competitive set. While it’s inevitable marketers will be trying to stand out among the other players in their category, there’s a new wave of direct to consumer brands and a long tail of third party sellers vying to capture consumers’ attention. In addition, Amazon Basics now comprises more than 70+ private label brands, predominately across clothing, electronics, packaged and household goods, giving Amazon more reasons to prioritize its own products in recommended search results.
As marketers navigate the early stages of untangling which competitors are actually the biggest threats, it won’t be as obvious as offline competitors. Another wild card - how might the role of counterfeits impact your sales or brand image? This makes continuously auditing your competitive set more critical than ever.
3. What is the health of my brand and product pages?
Your product pages and Amazon store are an extension of your brand, but the process of creating and maintaining healthy assets requires a more data-driven approach. For example, understanding which keywords in the headline and product description will maximize discoverability, how the use of video and Q&A can help improve conversion, and synthesizing ratings and reviews to assess customer satisfaction are all key ingredients that play into the likelihood of a brand getting bubbled up. There are many dozens touch points that should be dissected to create an effective Amazon presence.
4. Promotion of which products/SKUs/ASINs generates the best ROI?
Many consumer packaged goods brands have dozens, if not hundreds, of different products within their portfolios. With Amazon’s dynamic ecosystem there are several levers that play into brand exposure. Having a holistic perspective on which products are most likely to perform helps optimize an Amazon strategy by identifying where paid media dollars can be most effective, versus wasting ad spend on products that are difficult to elevate. It’s less about crafting a savvy keyword strategy or sticky marketing message, and more about accepting Amazon’s influence behind the scenes as the Kingmaker of products. If you understand where to focus your paid media, you’ll see stronger results.
"The Amazon shopping experience relies on algorithms and black boxes to decide which products get shown at each occasion. Brands need to have the support of sophisticated machine learning platforms that can talk back to Amazon’s systems to negotiate in real-time on the brand’s behalf," says Figueroa.
5. What percentage of my sales come from organic search versus paid listings?
Understanding the contributions of organic search and paid listings is paramount for brands seeking to maximize presence at the digital shelf and grow sales. The increasing focus on protecting a brand through paid listings and growing ad attributed sales, which Amazon measures for you, has left many brands cannibalizing their own organic sales without realizing it. Marketers deserve to have the full picture of their brand transactions, including their sales ranking in relation to the category, as well as the breakdown of attribution between organic and paid sales.
It’s increasingly clear that when it comes to Amazon, an effective strategy will go beyond the media experience and expertise that have served brands on other dominant platforms. Technology solutions using machine learning and Artificial intelligence will be imperative to helping marketers make sense of the billions of data points created across millions of products. As we enter digital media 3.0, the brands that explore the right questions will get the edge that will prepare them for this new era.
Jessica Peltz-Zatulove is a partner at MDC Ventures.