Lego is spending more money on Amazon, using everything from video advertising to voice to augmented reality.

Lego has already launched two Alexa Skills within the last eight months. The second debuted in May as an interactive storytelling service for children aged 2 to 5. While it’s too soon to share feedback, the toymaker is already thinking about how similar services might look as podcasts or audiobooks on Alexa and beyond. Lego’s approach is less about buying search adverts — for now — and more about producing content.

As more queries are made via smart speakers, there’s a strong chance many of them will be purchases. More than eight in 10 (83.3 percent) of the online sales for Lego, Mattel, Hasbro and Nintendo products came from Amazon in 2017, according to a study by analytics firm Jumpshot. James Poulter, head of emerging platforms at The Lego Group, sees a time when a person’s Lego order from Amazon will notify their Alexa device to download the corresponding Skill and will know when to ask whether they’re happy with the delivery.

“Yes, there’s an element of risk [when working with Amazon,] but what brands have to remember is that you can’t just treat it as a retail platform; you need to think as vertically integrated platform,” said Poulter. “As Amazon begins to roll out more content services like Alexa and the Amazon Freetime Unlimited [subscription service,] there’s so much to capitalize on than just purely a marketplace.”

Some marketers see voice search as a threat and path to commoditization, but Lego doesn’t worry much about that.

“I don’t think voice search is as much a risk to a brand like Lego, where we have a more interesting proposition to a category like consumer goods. … I’m a big believer that by 2020 nearly every major brand will have an audio strategy and that’s because of how fast the smart-speaker market is growing.”

Lego’s growing interest in Amazon is reflective of how some advertisers are no longer interested in just the site’s search ads. Amazon has improved the content options for its brand stores and introduce AR, which have piqued the interest of advertisers like Lego.

The toymaker is testing how AR on Amazon might help it sell more products. Last November, the retailer launched a feature that let shoppers visualize online products wherever they are, using their iPhone’s camera. It’s these sorts of experiences where the brand provides some sort of utility where Poulter believes AR can have the biggest impact. As popular as a recent 360-degree Facebook video of a first-person view from one of its rollercoasters was, it might not be once the hype around AR has worn off, said Poulter. He cited the Ikea Place app, which uses AR to let customers preview how furniture looks in their rooms via their smartphone’s camera, as inspiration. Poulter said, “We’re thinking about how an immersive technology like AR could potentially change the buying experience for shoppers, particularly for parents.

“When Amazon is able to say that 70 percent of all purchase journeys start on its site, they’re able to know what’s selling and see what margin they’re getting from first- and third-party sellers,” said Poulter. “Amazon’s ability to dictate purchasing habits is more powerful than it’s ever been.”

Subscribe to Digiday’s Retail Briefing email for more coverage, exclusive insight and insider interviews on the modernization of e-commerce and retail.

 

  • LinkedIn Icon