Triumph in the Age of Amazon
With each technological advancement and category expansion, Amazon has positioned itself as the most dominant marketplace in the world. As they continue to become more pervasive in our day-to-day lives, every marketer is left wondering whether their brand can survive Amazon’s unprecedented push towards discount-driven commoditization.
The key to Amazon’s dominance is a business model predicated upon continual growth. For consumers, this manifests itself as an endless stream of e-commerce evolutions. Some are breakthrough, like augmented reality shopping. Some appear flawed, like Amazon Key. Alongside those innovations, however, come the inevitable increase in discounts.
This has made Amazon a force capable of redefining everything and everyone in its path – from brands to retailers to technology platforms, even content creators. Just ask Nike. Earlier this year, as its market share continued eroding, the sneaker giant empowered Amazon to sell its apparel directly. What’s next, Brett Favre playing for the Vikings? In this era of corporate Darwinism, the default option has become play nice with Amazon. And, to an extent, this is valid – it’s impossible to ignore this New World Order of commerce. However, it’s far too premature to name Amazon the king of commerce.
As commanding as Amazon has become, they’re not indispensable. Armed with the right data, partnerships and media strategy, it’s not only possible to survive without Amazon as a direct-to-consumer brand, it’s possible to become a leader. Upon deeper analysis of the landscape, there are numerous opportunities for brands to build a stronger presence and bolster their bottom line. But before we get to how, it’s worth dissecting the many battlegrounds that Amazon is engaged in:
Currently a 3-horse race between Siri and Google Home—both of which rely on Google—and Alexa, which uses Bing as its default search provider (but recently added Google as a feature). It’s likely these competitors will ultimately provide more utility, above and beyond e-commerce, than Amazon.
Where do people go when they want to buy something? The answer is still “Google” just as often as it is “Amazon,” and the rate of commerce driven by social platforms is only increasing.
Data & Advertising
Outside of data behemoths such as Google and Facebook, even individual companies are beginning to join forces by sharing their data with Ad Tech partners in an effort to out-scale Amazon. In response, forthcoming API and programmatic scaling of their ad business could briefly tilt the balance in Amazon’s favor – although recent pushes by surprising competitors, such as Kroger, show that purchase-data-fueled programmatic will likely be democratized. Also, it remains to be seen whether enhanced self-serve capabilities for buying Amazon ads, via platforms such as Kenshoo, will drive increased advertiser adoption.
While Amazon continues experimenting with its sputtering Spark platform, the vast majority of consumers still turn to the social channels they love for inspiration and feedback: Instagram, Facebook, Pinterest and even Snapchat.
By adding Jet.com, rapid delivery and a Google Home partnership, Walmart is making a splash online while maintaining its brick and mortar stronghold. And their sales are at an all-time high, as a result.
Upon further scrutiny, it becomes apparent that this unstoppable force of retail appears a little more vulnerable. Amazon will continue gaining traction in a number of these arms races, for sure, but the mere fact such kerfuffles exist prove that competition is alive and well. As such, the question remains: why does the entire marketplace seem resigned to the inevitability of Amazon’s dominance?
The most dangerous assumption, which plays into this perception, is that advertisers have already maximized the value of all other advertising and distribution channels. Because of this, Amazon becomes the most profitable avenue to explore. In reality, this couldn’t be further from the truth.
Through our media planning, buying and analytics efforts for dozens of large brands, most notably in the retail and CPG verticals, Edelman Digital’s Performance Marketing team has discovered an alarming commonality:
3x more effective
Despite this, according to eMarketer, brands are still putting the majority of their online dollars into display. With the increasing ability to link online spend to offline actions, as well as model consumer touchpoints across channels and devices, there’s no longer an excuse to not make social a primary component of any media plan.
It’s mission critical that advertisers place their dollars where current and future growth is most impactful, rather than make arbitrary allocations. As AdAge and The Wall Street Journal recently noted, Publicis, WPP and Omnicom plan to increase investment in Amazon by “between 40 and 100 percent in 2018,” ostensibly because of Amazon’s purchase behavior-driven targeting (though it’s equally likely they’re doing so to finally exert pressure on Google and Facebook). Which begs the question, is this sweeping change good for brands or just the holding companies that represent them? Moreover, if this shift is happening and competition outside of Amazon declines as a result, could now be the ideal time to invest even more with Google and Facebook?
There’s never been a more critical time for brands to identify the best technologies and to associate with the brightest strategic partners, in order to navigate the ever-changing landscape and grow their business. This is a battle that must be fought on all fronts. It’s not enough to outmaneuver Amazon, nor is it wise to focus on them alone. The very strategy that founder Jeff Bezos and team seem to have thrived with should become your marketing playbook:
Over the past decade, Amazon has seeped into nearly every category and launched an endless barrage of tech breakthroughs, though that doesn’t mean they’re inevitably the wisest next investment for your brand. They stand as the leading force in this New World Order of commerce, but with the preponderance of new data sources, consumer exploration channels, meaningful technology and partnerships to explore, the time for a brand renaissance is now.
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