Google and Facebook have long dominated the online advertising industry. According to eMarketer, combined they account for about 60% of total online marketing spending and 64% of mobile ad spending. There are good reasons for their sustained success. They reach the largest audiences, have the sharpest algorithms, and control a large number of popular subsidiaries like YouTube and Instagram. But money seems to attract Amazon the way blood in the water draws sharks. The Seattle-based predator has recently been working hard to sink its razor-sharp teeth into the lucrative online advertising market, and they’ve racked up a string of successes in attracting eCommerce ad-spend. Let’s take a look at why Amazon is picking the pockets of its fellow tech giants, and whether or not they’re likely to keep growing their advertising arm.
One of the reasons shoppers and brands are gravitating to Amazon ads is the realization that where you see marketing content is as important as what the content actually is. When you are scrolling through photos of your co-worker’s engagement party and your niece’s birthday, an ad for an Asos sale seems annoying and intrusive. Even if the top is adorable and it’s 40% off. When you’re trying to quiet a screaming child with an episode of Peppa Pig and an auto-play video ad with incredibly loud audio starts playing, you’re bound to be annoyed!
Brands and retailers are starting to realize that consumers are savvy enough to appreciate brands that offer them useful information when they’re in shopping mode, and that they can build goodwill by targeting ads at people who are shopping rather than annoying them with ads when they’re relaxing. A 2018 poll conducted by American National Public Radio and marketing firm Marist found that when people were looking to shop, 44% began their searches with Amazon, a greater number than the 33% of prospective shoppers who started off with Google.
Designing campaigns around Google and Facebook ensures that your ad will reach a large audience, building awareness of your product or service in an attempt to possibly influence a future purchase. But as users get better at tuning out unwanted content and ad-blockers become more sophisticated, betting on this strategy is looking less and less attractive. With Amazon ads, brands can be sure that they’re reaching consumers who are already shopping and are far more likely to visit their Amazon product page to actually buy something in the near future. Amazon ads offer key product placement at a time when the audience is primed for purchase.
In Ads, We Don’t Trust
Consumers have always been skeptical about claims made in advertisements, and this inherent skepticism has only increased during the era of “Fake News” and Deep Fakes. But consumers still seem to put a great deal of trust in online product reviews. A Qualtrics study of online reviews unearthed a host of statistics showing the influence of Amazon, Yelp, Trip Advisor, and other titans of the review industry:
- 90% of respondents who recalled reading online reviews claimed that positive online reviews influenced buying decisions, while 86 percent said buying decisions were influenced by negative online reviews. (Dimensional Research)
- 91% of 18-34-year-olds trust online reviews as much as personal recommendations. (BrightLocal)
- 93% of consumers say online reviews impact their purchasing decisions. (Podium)
- 93% of people who use mobile to research go on to complete a purchase of a product or service.
- Four out of five consumers have changed their minds about a recommended purchase after reading negative online reviews.
The importance of online reviews is a huge systemic advantage for Amazon. While an ad on another platform can include text or audio and video testimonials, the information provided there will be viewed skeptically, while an Amazon ad can take shoppers directly to a product page and testimonials they feel they can trust. While fake review scandals still pop up at Amazon from time to time, Amazon ads come with a built-in advantage for getting customers to take your claims of quality seriously.
One Hand Washes the Other!
Amazon’s organic listings use sales volume to determine results. When someone keys in a relevant query, the better your sales on Amazon, the higher your product will appear in the list of search results. Amazon ads will thus have a significant impact on your sales on their platform. The CEO and co-founder of baby products start-up Mushie, Levi Feignensen explains the process: “[Amazon ads] were essential for us to get our initial customers to buy our products. As those first customers bought our items and left reviews, it helped increase our organic search rankings as well, which naturally led to more sales. Over time, it’s had a kind of snowball effect where the ads and improving organic rankings have helped us continue to bring in new customers.” Improving your organic listings will also continue to have a positive effect on sales even after your campaign concludes.
There’s Always A Catch
Amazon ads sound great for improving your sales today. But if something seems too good to be true, it probably is. In the case of Amazon ads, the pitfall lies in creating a dependence on a company that has the resources and ambition to compete with established brands all over the marketplace. Amazon ads might improve your bottom-line today, but they’ll also funnel transactions into a platform controlled by a potential rival. They’ll give Amazon data on all of your customer relationships, and how sales are converted in your industry. And all of the customers you attract will be accustomed to receiving your product with the speed and low cost of Prime shipping. Your future success or failure will be in the hands of a company that could launch a rival product, undercut your pricing, and kick you off of their sales platform. Amazon ads might work like a dream in the short-term, but we’d recommend building your own strategy to move transactions onto a platform you can control before the dream becomes a nightmare!