Kerry Curran, managing partner, marketing integration, Catalyst
Big box stores? Hardly know ‘em! With two kids under the age of six, I receive all of my family’s dry goods via an easy monthly delivery. Birthday presents or holiday gifts? No problem! I can buy the latest “must-have” toys online in a few quick clicks. Read an article about the wonders of the spiralizer, and one is on my doorstep in two days. The pediatrician recommends a certain vitamin, and it’s in my cart on my way out of her office. All of my purchases are from the comfort of my phone, with a few scrolls and taps in an app, or through my laptop between meetings.
Amazon Has Morphed into a Search Engine
Amazon has not only disrupted our old shopping behaviors, it has also disrupted the retail industry and is now disrupting search and digital marketing. In 2012, Amazon first surpassed Google as the top destination for U.S. online shoppers. Today, Amazon is not only the country’s undisputed e-commerce leader, but a top search engine and critical channel for product and brand discovery. With this revolution comes substantial product marketing opportunities and the requirement for brands to rapidly navigate how to integrate Amazon into their media plan.
Brands have been working with Amazon to sell and distribute their products since Amazon expanded beyond selling books in 1998 with the acquisition of the Junglee Corporation which sold “everything from clothing to computers.” However, it is only in the past four years that Amazon has allowed brands to promote their products on site.
A study by Bloomreach found that, in 2016, 55% of shoppers start their product search on Amazon, up from 44% in 2015. With that momentum, I predict it has gone even further. Amazon has not only solidified itself as a search engine, it has eliminated numerous steps in the purchase conversion process, allowing a consumer to go from idea to purchase in 4-5 steps (search, scroll, choose, read, purchase) in less than a minute. With credit card information already saved on the platform, the shopper has a very quick conversion process. Considering we are all pretty much physically attached to our phones, whether it is an impulsive buy (my spiralizer) or remembering we need toilet paper, our purchases are quick and easy. And, with the rise in adoption of Alexa, you won’t even need fingers!
Amazon’s Growing Media Power
In a recent interview with Barron’s, Scott Galloway, Professor of Digital Marketing at NYU and author of “The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google,” points out that Amazon’s media group is growing faster than Facebook or Google. In its report, “Amazon Advertising: Reconsidering the Retail Platform,” eMarketer estimated Amazon’s ad revenue at $1.65 billion for 2017—far below that of Google or Facebook, but above brands like Twitter and Snapchat. For any brand selling products online, if you’re not already partnering with Amazon, it is time to evaluate the “why not” and if you are already selling on Amazon, you need to ensure your digital marketing team is partnering with your merchandising team to maximize your product promotion. As has been the case with Google, if you’re going to be successful on Amazon, you need your products to be at the top of the search results when they are searching on Amazon.
Merely 17% of Marketers Have a Clearly Defined AMS Strategy
Catalyst, which specializes in search marketing, recently partnered with ClickZ to dive deeper into brand side marketing efforts around Amazon Marketing. The joint research showed that only 17% of marketers say their companies have a clearly defined strategy for Amazon Marketing Services (AMS), which are targeted advertising solutions offered by Amazon to help brands reach new customers and drive sales on Amazon.com. Furthermore, the research revealed that only 15% agree that they are using AMS to its full potential. These statistics were not surprising. For years, Amazon’s marketing suggestions to our clients’ digital marketing teams would fall short with “Amazon is exclusively managed by our shopper or merchandising team”. This trend is shifting, with 61% of survey respondents stating that their digital marketing teams are now responsible for paid advertising on Amazon.
Survey results show that marketers are planning to grow their Amazon marketing budget, with 63% stating they plan to increase budget and 42% stating they have created new budget for Amazon. This data demonstrates an awareness and prioritization for including Amazon in the digital marketing plan and budget. However, if only 17% are stating their companies have a clearly defined strategy, there are a lot of brands that may be wasting budget or not maximizing potential.
Holistic Strategies Drive Results on Amazon
Many brands start with only display ads, which only aid the top-of-the-funnel consideration. While a well-positioned display ad can support competitor conquesting and increase product awareness, such ads don’t frequently drive a product purchase, and therefore marketers don’t typically see a strong Return on Ad Spend (ROAS).
A holistic Amazon marketing strategy also includes investment in Headline Search Ads and Sponsored Products. Similar to Paid Search advertising in Google or Bing, these opportunities are keyword-based and allow marketers to align ad promotion to the shopper’s search query. Headline Search Ads appear at the top of the Amazon search results page, featuring a selected variety of products related to the query. When a shopper clicks on the headline search ad, they go to a search results page that uniquely showcases the promoted brand and product range. Sponsored Products ads promote your products directly within the organic search results. Sponsored products can increase sales of key promoted products. Both Headline Search Ads and Sponsored Products drive ROAS, and because they are tied to specific Product Detail Pages (PDPs) (the main product page within Amazon, including the brand, title, product image, rating, price, features, product specs, and other related information), they also aid in the organic visibility of those products when they are not sponsored, driving overall click-through rate and sales.
Launching paid advertising within Amazon is relatively easy, but if you are promoting a product that has a weak or incomplete PDP with minimal positive reviews, you may be competing with a much stronger product page. In order to drive sales, your PDP needs to be both “findable” and “shoppable”. A strong findability/shoppability strategy can help your PDP achieve the “holy grail” of Amazon, earning the “Amazon’s Choice” selection for your product category, a must have to win on any Alexa voice queries.
Just like web page positioning in Google or Bing, each Amazon product page needs an integrated strategy that applies both organic search factors and paid search tactics. You can have the most detailed PDP on Amazon, but if you are not optimizing for the keywords your customers are using in their shopping queries, they will not find you. Keywords improve your product relevancy, while the content on the page helps provide the information the shopper needs in order to choose your product over the next one.
A content strategy based on consumer insights and search behavior should inform product headlines, images, infographics, and A+ (Amazon’s paid landing page copy enhancement option) content. A strong PDP will provide a consumer not just the product information they are looking for, but also the product attributes they didn’t even realize they needed, and should now require.
Holistic integration of paid promotion and organic search strategies at the keyword and PDP level is required to truly drive business results through Amazon. Through this type of holistic strategy, one of Catalyst’s clients, for example, improved ROAS from 174% to 350% and increased revenue 188% despite only a 43% increase in spend, over a three-month period.
The Importance of Retail Readiness
Brands and marketers do need to keep in mind that at the end of the day Amazon values the shopper as their true customer, so all business decisions are focused on what makes a better shopper experience. This means that merchants have a number of hoops to jump through to achieve what Amazon refers to as “Retail Readiness”. At a recent roundtable we hosted, the brand side participants shared a lot of challenges around the stringent requirements Amazon holds them to as well as frustrations when their products are paused and removed from the website if they don’t meet all of the requirements.
Amazon is going to prioritize price and the ability to quickly ship the product to the customer. Brands can sell through Amazon as a Vendor or a Seller, and there are direct implications for each strategy. A Vendor ships product to Amazon and Amazon distributes directly from its warehouse. Amazon often requires these shipments to be smaller and more frequent, which is not always efficient for merchants. Sellers use Amazon as a selling platform, but ship the purchase directly.
For Vendors, Amazon determines the price based on pricing on the same product across the internet. For Sellers, the merchant gets to set the price. Brands need to decide which option is best for their business and bottom line. While a brand might want more control over shipping and pricing, Amazon is going to prioritize the product they can price competitively and ship immediately.
Summary
Amazon is rapidly evolving and expanding its offerings and capabilities, including new promotion opportunities on the horizon for both Amazon Fresh and Amazon Now. Product brands and marketers should strive to be in that 17% that has a clearly defined strategy, and not just throwing more money at Amazon and hoping it sticks. Brands need to ensure they are building a solid foundation with a shopper centric Amazon strategy, integrating both organic search best practices and AMS opportunities.
As Amazon evolves, so will our shopping behavior. Today you may be making an emergency trip to a big box store when you run out of toilet paper. Tomorrow it will be an Alexa shout out or predictive eCommerce order with immediate delivery.
Catalyst is a search and social agency for Fortune 1000 companies.
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