JM Lab 2 minutes, 29 second read Jim Hawker, Co-Founder, Threepipe
Around 12 months ago, we noticed more of our client discussions about growth strategies were coming back to what to do about Amazon. But there was almost a feeling of trepidation about how to tackle this ‘wild west’ of retail, where brands themselves are competing against resellers of their own products.
This, combined with a lack of understanding about how to work with the Amazon platform or of the Amazon algorithm itself, has been a major barrier to brands investing their marketing spend into this ecommerce platform.
Where search starts
Over the last 12 months though, there has been a shifting of sands. Amazon itself is starting to court agencies and brands themselves and to position itself as a viable alternative to the existing duopoly of Google and Facebook, which consume most brand media budgets.
With more product searches starting on Amazon rather than Google – and with higher purchase intent – brands realise that they must develop a well-considered strategy to protect and grow their revenues.
Brands choosing to ignore Amazon over the last few years has created massive gaps that challenger brands have filled. Brands that you have never heard of are actively stealing revenue away from well-known rivals because they have thrown themselves into the platform and understand how to make the Amazon algorithm work.
Established brands take note
It is increasingly important therefore that new and established brands consider how they can both optimise organically for relevant product searches on the platform and also create effective paid media strategies that capture the huge product search volumes from a growing customer base. Brands need help in better forecasting and pricing competitively on a platform that requires a more dynamic approach to pricing strategies.
Because of the level of sales and forecasting data that it is possible to gather from Amazon, we are building out innovative revenue sharing agreements as part of our compensation model. This requires us to build out an agreed baseline of performance and a revenue share based on incremental sales and allows us to share the risk and reward with our clients.
The Amazon ecosystem will continue to evolve in the same way that the Google and Facebook platforms are innovating and making it easier for brands to invest. It’s an opportunity which brands need to consider adding to their overall media plans or at least start testing some campaigns to understand the impact of their marketing spend.
Balanced media plans
We were fortunate to have a number of clients over the last year who were willing to commit some test budget to Amazon. The results have given them the confidence to spend more and balance out their media plans. However, although it’s simple to think that Amazon should only be considered by physical products, we are seeing an increasing number of financial services brands keen to drive brand awareness campaigns through Amazon channels because of its urban ABC1 customer profile.
Amazon isn’t the only marketplace in which we are investing. We believe eBay and others also present some highly interesting opportunities.