Agency relationships with Amazon evolve as they adapt to retail media opportunities

This article is part of a limited series exploring the challenges and opportunities associated with commerce media, from e-commerce to retail media networks. More from the series →

As agencies have moved more aggressively into the domain of commerce media, one has to wonder about the role of Amazon — specifically, how the holding companies and independent agencies setting up retail units impacted their all-important relationship with the 800-lb. gorilla of the space.

Given Amazon’s share of the e-commerce market, it clearly is the dominant force, challenging agencies to grow their media spend, said Bertrand Fraboulet, global managing director of Havas Market, which is Havas Media Group’s entry into e-commerce.

As so many different parties — including the legacy agencies, pure-player Amazon agencies and Amazon itself — now wield power over disparate segments of retail media, the playing field has leveled somewhat. “In the current state of play, all parties are interdependent and need to leverage each other’s strengths to build the most efficient client e-commerce strategy,” Fraboulet said.

Legacy agencies and Amazon pure-player shops, meantime, have engaged in what Fraboulet described as fierce competition, as the old-line agencies have had to demonstrate that they offer more value for their clients than simply managing Amazon search campaigns. At Havas Market, for example, while retail is a key component of the business, it also provides services like e-commerce strategic consulting, forecasting, e-retail operations management, content production and an integrated approach to sales analytics, combining sales and media data.

Even as Amazon reigns, numerous retailers have built out their own retail media solutions, including Walmart Connect, Target’s Roundel and Carrefour Links, part of the European supermarket chain. Thus, advertisers have rapidly expanding choices that extend far beyond Amazon search, especially in the fast-moving consumer goods (FMCG) category. That means advertisers need agencies more than ever to “navigate across this profusion of offers,” Fraboulet said. 

The strength of legacy agencies lies in their ability to integrate commerce media into a full-funnel, 360-degree media approach, he added, “levering synergies between traditional and commerce media to strike the right balance between awareness and short-term performance.”

“The opportunity and where brands need agencies to move — and where we’ve moved — is in delivering connected commerce,” said Megan Pagliuca, chief activation officer at Omnicom Media Group, who has oversight of commerce media. 

OMG’s partnership with Amazon has accelerated in recent years as it has used the close ties and leverage it has with the e-retailer to develop unique capabilities for clients, according to Pagliuca. For example, at Cannes Lions last summer, OMG announced an agreement with Amazon to share aggregated insights, new tools and talent training. The deal enables OMG agencies to access insights from the Amazon Marketing Cloud (AMC) to improve e-commerce planning, media mapping and sales forecasting. 

This month, OMG established another program with Amazon to further educate its own client leads, as well as Amazon’s teams, by breaking down the holding company’s complex relationship with the retailer and its benefits “so everyone’s on the same page,” Pagliuca said. That arrangement includes a tracker that reports which Amazon tools are used by a client.

When it comes to standards for data in the retail media space, meanwhile, the synergy between Amazon and the agencies is what’s moving the needle. While Amazon —having been in the game for so long and being such a dominant force — may have an edge when it comes to data, it still needs agencies that understand how to use its datasets appropriately to move business forward, said Paul Williams, head of commerce product strategy and business development at Publicis Commerce. 

“Amazon’s an incredibly important benchmark — they are the most advanced in the way they’ve been thinking about data,” said Williams, noting that Publicis has worked with Amazon to join retail data with marketing data to provide brands with better insights. But, he added, “We can kind of help bridge that to the agencies, and subsequently to the clients, using it to better their media programs or better their experiences with their products to put in front of their customer bases.”

Amazon isn’t the only e-retailer benefitting from agency relationships. Publicis Groupe last fall announced a deal with Carrefour Group to use the holding company’s technology, CitrusAd powered by data giant Epsilon, to provide media and data solutions for advertisers, backed by merchant transactions. 

Jay Pattisall, vp and principal analyst at Forrester, noted that the relationship between agencies and big tech, including Amazon, has generally evolved from an ostensibly competitive positioning to more of a partnership in recent years. “There is acknowledgement among the largest tech players that their partner programs oriented toward media agencies are developing in their sophistication because they see them as important clients that have to be served, and they develop programs to enrich those relationships because they are [tied to] ad revenue,” he explained.

While Amazon is the largest player in commerce media, it is far from a one-on-one matchup between the e-retailing giant and the agencies. As Pattisall characterized it, there are “hundreds, potentially moving toward thousands of players” in commerce media. That increasingly puts Amazon on the defensive, he argued, adding that the growing number of parties jumping into the space is partially to blame for the weak performance of, and subsequent cutbacks in, big tech.

Amazon, he said, “remains the behemoth in digital advertising — they just have many more competitors for ad revenue.”

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