After months of speculation, Amazon has revealed how it will try to pull in U.K. marketers’ ad budgets. The so-called sleeping giant in online media wants to be viewed as the best place for ad spend as more shopping goes online.
The pitch became clearer at its first IAB upfront session last week. The media was banned from the event, but agencies and marketers told Digiday what was likely revealed based on recent discussions they’ve had with the retail behemoth. One agency executive, who spoke to Digiday under the condition of anonymity, summed it up: “Advertising on Amazon is unique in the sense that the media is less effective, potentially wasted, if an advertiser’s e-commerce presence there isn’t well-established.”
Amazon has labored to address this issue, as seen by the raft of specialist divisions several agencies have recently formed to tackle it themselves. The reality is, the technology firm hasn’t had to focus on advertising in the same way as Google and Facebook — until now. Amazon may still make most of its money from retail, but ad budgets offer a higher-margin return if it can convince marketers to make space for it on media plans, which is why the behind-closed-doors briefing is telling.
Whenever Amazon has talked to advertising executives in the past, it has highlighted the pace of e-commerce sales, which eMarketer predicts will climb 14.5 percent in the U.K. this year to hit £81.6 billion ($106.5 billion). Despite this growth, convincing marketers to spend on Amazon will be easier said than done.
“In many organizations that are just getting started with Amazon, it’s a sales team that works with the platform, so there’s often a disconnect between what that team and the marketers want to do,” said the agency executive. “That’s why you have to approach Amazon as a holistic investment so that the media and commerce fundamentals are inextricably linked.”
Amazon executives in the U.K. are working with agencies and their clients to understand those fundamentals, as it has done in the U.S. Before even thinking about targeting audiences, agencies and their clients are advised by Amazon’s vendor managers to examine the search engine optimization strategies for the products they are trying to sell on the site. Marketers are asked questions like, “Is the brand’s product listed on Amazon?” and “Is it discoverable through natural SEO?” so when a shopper searches for a dog-food brand, for example, the keywords used for its ingredients show up in as many searches as possible.
It’s little wonder, then, that many planners expect interest in Amazon’s ads to come from brands already selling on it. For any advertiser-turned-Amazon vendor, Amazon is pushing its performance inventory, with its paid search and display ads. As more product searches start on Amazon, its executives want to show marketers how to capitalize on those, starting with paid search ads before being retargeted with its display ads (what it calls e-commerce ads).
While Amazon’s equivalent of Google AdWords and Facebook Ads Manager is not as developed of a product, there are some instant benefits for advertisers. For example, Amazon is a newer platform with far less competition on it for advertisers, according to an agency head of paid media, who spoke to Digiday on the condition of anonymity. “The auctions [on Amazon] are not as saturated, resulting in lower traffic costs,” the source said. “Combine this with the conversion mindset of the users, and we have seen some excellent return on ad spend from Amazon ads.”
Amazon has highlighted the scope of targeting on its U.K. site in recent meetings with agencies. Advertisers can combine their own first-party anonymized data with the retailer’s to target lookalike audiences that may be buying rival brands on the site. Targeting on Amazon also encompasses helping brands reach new audiences that are likely to show interest in a product due to profiling based on their shopping and browsing history.
Clients are “undoubtedly” interested in those campaigns, observed the agency head of paid media. However, as with any new advertising platform, that enthusiasm doesn’t always translate into activity.
In the U.K., Jaguar Land Rover has only run test campaigns on Amazon to date and its spend on the site is minimal. Moving forward, Dominic Chambers, global head of digital marketing at Jaguar Land Rover, hinted those tests could become something bigger as the site grows as an automotive retailer. “Amazon [is] interested in cars, and I think there’s going to be change in how cars are sold,” said Chambers, speaking to Digiday last week at the Festival of Marketing in London. “No one should underestimate the power of Amazon. … We’re not selling cars on Amazon, but just as a media platform, they are effective.”
Similarly, the perception still lingers that Amazon doesn’t suit luxury brands due to its history of enjoying competitive and promotional pricing from sellers. Luxury budgets haven’t been a priority for the company, though this will likely change once it successfully grows the social, video and voice parts of its advertising. The launch of Amazon Spark in the U.S., its Amazon Influencer Program in March and new Amazon Store brand pages could also pull in bigger budgets moving forward.