Clients are ‘running before walking’: Confessions of an agency exec on Amazon’s media business

Amazon already is a media giant with a $1 billion ad business. But brands are confused about Amazon’s slew of puzzling acronyms and struggle with navigating the Amazon ecosystem, even with an Amazon rep.

For the latest installment in our Confessions series, in which we exchange anonymity for candor, Digiday spoke with an agency exec who is working with several brands to revamp their Amazon strategies after Amazon persuaded them to purchase expensive media bundles that have not delivered results.

The conversation has been edited for clarity.

What do brands struggle with when it comes to spending on Amazon?
A lot of brands, especially in the [consumer packaged goods] and luxury personal care space, are now saying, “OK, we have to do this Amazon thing, but we’re not really sure what to do.” Most of our brands don’t even know the difference between AMS [Amazon Marketing Services] and AMG [Amazon Media Group]. So for the most part, when they look to their media agencies or Amazon, they are very much encouraged to invest dollars in AMG with expensive bundle packages that have minimum thresholds.

But you don’t have to spend a lot of money with Amazon to get great results. At one point, $100,000 was one of the thresholds for an AMG package. But with AMS, you could spend $10,000, and that’s fine. Ultimately, these AMG packages are a bit of an overkill for brands because they may not need that right away. [Brands] are running before walking. Most of the time, when we engage with a brand, they’ve already done AMG, and it’s understanding how they can roll back and get their house in order.

They realize they’re spending too much money and not getting the results they want.
Right. AMG is about driving awareness over a long period of time.

What do these AMG packages look like?
It’s mostly display advertising with behavioral data, and ad serving goes outside of Amazon to some of Amazon’s other properties like IMDb. You can also get a homepage takeover or a seasonal banner. In some cases, if a brand spends enough, they get a representative, but an AMG rep is not going to help you with a product page or any challenges you have. They are strictly there for media.

How is AMS more efficient?
AMS is focused on direct sales and ROI. AMS is the self-service platform that allows sellers to target, via keywords and sponsored ads, and drive traffic to their brand stores. Many of the AMS services are pay-per-click and very efficient. With AMS and a keyword strategy, you can capture category folks who weren’t looking for your brand. Plus, you don’t have any other media in a brand store and viewers are not being served competitor or third-party products, so it’s a little more controlled. Lastly, the brand store is also free for now, so it’s almost like, why wouldn’t you want to do that? We’ve had the most efficient results with AMS. For some clients, it’s between 300 to 500 percent return on ad spend. A good example of a potential inefficient use of budget is a brand spending $100,000 on a homepage takeover before investing $10,000 in an SEM campaign. We generally recommend our clients spend about 1 percent of their projected sales against media on Amazon.

How does Amazon reach out to brands about AMG bundles?
Because clients aren’t exactly clear on what they need to do, they go to their media agency or Amazon and end up buying a huge media package from AMG, and they’re spending a lot of money. A lot of the time, media agencies will recommend these bundles because they look very similar to what media bundles look like outside of Amazon, or Amazon reaches out to brands directly about these bundles.

Why would Amazon push brands into AMG relationships versus focus on showing them what they can do with AMS?
AMG is a separate entity and is a direct competitor of any other media, publishing property. So it’s a place to make money. It’s opportunistic, and that’s just how Amazon is. We try to help brands be educated before they make those investments.

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