Amazon wrestles with Google for advertising and shopping searches
Here’s a task: define Amazon. What’s your answer?
Did you (like many) define Amazon as an online marketplace? Or perhaps as your online shopping haven? If you’re anything like me, you might define it as your obsession.
What many don’t realise is that Amazon is (among other things) a search engine. Similar to Google, Amazon provides users with a platform to search for (and crucially purchase) pretty much anything. This puts Amazon in a very powerful position – both with consumers and with advertisers.
Many businesses have shifted their advertising spend in recent years, with cost-effective channels like Facebook and now Amazon competing with Google.
The trend is already clear in the US, where 80 per cent of companies who took part in a Marketing Land survey said they were switching their focus to the internet shopping behemoth.
The reason they’re doing that is clear – there’s a swifter route to purchase than PPC advertising on Google or Facebook offers.
Shoppers start search on Amazon
Add in the fact that at least 38 per cent of shoppers start their search on Amazon, while only 22 per cent start out with a Google search, and there are powerful reasons to think about dropping some of your AdWords spend and pumping it into Jeff Bezos’s $1 trillion online emporium instead.
The survey of 700 respondents found 81 per cent of small businesses and 62 per cent of larger firms were planning to switch at least some of their online advertising to Amazon, with half planning to move incrementally away from Google and social advertising – a good strategy when testing the waters.
Essentially, businesses are looking to get a piece of the action on Amazon Prime from those people with itchy fingers who just can’t wait for their desires to be fulfilled. They need that reindeer onesie, and they need it now. And Amazon delivers, next-day or sooner.
Remember my recent post on the continued rise of ecommerce shopping especially in the grocery space? Well Amazon is getting in on that action too with Amazon Marketplace – positioning themselves as direct competitors to major supermarkets like Tesco and Asda.
Amazon keeps on growing – moving into new markets with the same consumer proposition: ultimate convenience. Amazon promises to save the consumer time and hassle and that’s what most consumers continue to value. This (coupled with the brand’s acquisitive nature) is what continues to propel Amazon’s success. If it spots an opportunity, it buys it. Thus Amazon’s brands include IMDB, Twitch, Audible and Whole Foods. And roughly a hundred others.
Becoming the brands it removed
It has wiped out bookstore chains and helped run retailers like Toys R Us off the High Street – and now, in the States at least, it’s steadily opening its own bookstores and retail units. It’s becoming the brands it laid waste to.
Slowly but surely, Amazon is taking over the world – and not just the retail world. And to reach its goal, it is willing to lose money. It keeps prices low to drive out competitors, either forcing them out of business or gobbling them up when they finally capitulate. And it can afford to do that.
As the US comedian Hasan Minhaj succinctly puts it, Amazon is willing to delay its gratification to give you instant gratification. And the reason it can do this is that retail, for all its worth to the business, is really only a side line.
What most people aren’t aware of is the gradual growth and success Amazon continues to achieve as the internet’s biggest landlord. Amazon Web Services (AWS) is where the real money is – leasing server space, laying on cyber security, providing cloud computing and storage, and building the infrastructure that businesses need to operate online.
It is the dominant force in cloud computing and is used by massive brands that you probably didn’t think rely on Amazon for web services. Brands like the CIA (yes, the CIA). Netflix – Prime TV’s direct competitor in streaming entertainment – is a client of AWS. And AWS’s revenue last year? $17 billion.
The deepest data pockets
On top of this, Amazon has the kind of access to personal data about you that Google and Facebook dream of. Amazon knows who you are and what you buy, what entertains you and where you go on the internet. This means that Amazon’s data pocket is deeper and more valuable than those of its competitors – and advertisers are taking notice.
Businesses small and large see the value in having access to that data and being among the products that Amazon points its shoppers towards. For those retailers and manufacturers, it’s worth the potential risk of Amazon undercutting them to reach that market of eager and engaged consumers.
You might find it hard to reconcile what I’ve just said here with my proclaimed obsession with Amazon. But the thing is that, even knowing what I know, I love Amazon. I love the way it makes shopping easier and admire its use of data and strategy in building its audience and growing its business. It’s easy to use, everywhere, immediate, and spreads knowledge – remember, it’s a business that was on built on books and boosted digital formats with its Kindle e-readers.
But what advice would I give my clients about adjusting their online ad strategy and moving away from other digital channel advertising? It all comes back to basics: Amazon is not the right channel for every brand. We first need to examine objectives and requirements and then define a strategy (and subsequent advertising channels) that is unique to the brand and its users.
To find out how we push the boundaries of PR, marketing, digital and web design to get the best for our clients, call us now on 0800 612 9890.