Tag: Amazon

Why Amazon is the New “Google” for Buying

They’re referred to as the “Duopoly” of online advertising. Facebook and Google account for 75% of the US digital ad spend and almost all of its growth according to Interactive Advertising Bureau (IAB). Facebook reported 45% growth in the last quarter and Google’s parent company, Alphabet posted earnings of $26 billion, 87% coming from advertising revenue.

But are these behemoths about to blindsided by a fierce competitor with a better ROI? We recently completed a consumer research study for a beverage manufacturer that uncovered an interesting trend, one that might tip the scale for advertisers.

Consumers, who had an Amazon Prime account, started their search for a purchase at Amazon 100% of the time. If they knew what they wanted to buy, they went directly to Amazon to search for different brands with the best price and delivery options.

With 85 million Amazon Prime members as of June 2017, it’s not going to take long for consumer brands to discover that if you want to invest ad dollars towards finding buyers with high purchase intent and conversion rates, Amazon is going to be hard to ignore. Although small in comparison to Google and Facebook, only 1% of global ads, it is one of Amazon’s fastest growing businesses, now on track to generate close to $2 billion this year.

Amazon also offers organizations a broad spectrum of advertising products ranging from their ad platform, offering mobile and desktop display and banner ads, to dynamic and coupon ads. Customer campaign pages allow advertisers to create immersive cross platform landing pages which can display more than one product.

With the digital ad market predicted to grow at 16% this year to $83 billion the “Duopoly” will get their fair share, and almost all of the attention, especially considering the growth of Facebook’s Snapchat ad revenue, up 158% in the past year. And that may be just how Amazon likes it. Having a history of sneaking up on competitors…just ask Microsoft and IBM about Amazon Web Services (AWS).

Andy Jassy, the AWS CEO said that in some ways the growth of his business was a classic case of disruption dynamics. “The competition simply didn’t believe there was enough of a market to worry about it. The dominant players don’t have any reason to worry about someone attacking the bottom of the market.” AWS now owns a third of the Cloud Infrastructure Services market, more than three times that of its next closest competitors.

Amazon seems to follow Al Pacino’s “never let them see you coming” advice from the Devil’s Advocate but one executive, Martin Sorrell, WPP CEO’s has noticed. Sorrell  in a recent interview with Bloomberg said, “The company that would worry me if I was a client – or I think worries our clients, more than Google and Facebook – is Amazon.” Smart ad dollars follow consumer behavior and from we just learned, those consumers, are headed to Amazon.

Jeff Bezos’ Secret Message for Marketers

Marketers, channeling their inner Maverick (Tom Cruise’s character in ‘Top Gun’) often find themselves thinking “I feel the need, the need for speed” but are plagued by internal speed bumps and stop signs. Little do they know that buried in Jeff Bezos’ annual shareholder letter is an approach for helping them accelerate marketing efforts, and navigate past internal road blocks.

Working with hi-tech clients, I learned the necessity for quick execution. Pipelines must be filled, leads progressed and converted, and quotas achieved. IBM had two “mantras” when it came to accelerating marketing execution. The first was the rule of “70%” and the second was “Fail Fast.” Once you had roughly 70% of what you needed (information, insight, etc.) to execute you then got into the market, letting the results refine your program and thus quickly course correcting. Built on the idea of the yield curve, the greatest gains in progress were made during the first 70% of effort, refining the remaining 30% being too costly and time consuming.

“Failing fast” was built on the idea of quickly testing “concepts” or theories. If IBM wanted to experiment with something new or different it would construct tests to quickly measure results to either scale or kill the program. These two guide points have influenced my thinking over the many years.

So it was interesting to see Jeff Bezos picking up on these same principals in his annual shareholder letter. Except he added his own twist. In his letter he warns of becoming a “Day 2” company. He defines Day 1 companies as obsessed with customers, skeptical of proxies, eager to adopt new external trends, and perhaps most importantly, their ability to make high velocity decisions. For him, Day 2 companies become static, quickly becoming irrelevant and out of business eventually. The key to staying in “Day 1” is the ability to move quickly, experiment patiently, accept failures, and “double down when you see customers delight.”

Bezos believes that there is no “one-size-fits-all” to decision making but rather “two-way doors” where decision can be reversed. Those decisions in his words use a “lightweight” process. It starts with what he phases as “disagree and commit.” Given the growing number of stakeholders in the decision-making process, could this be the secret marketers have been searching for to eliminate speed bumps?

As Bezos describes it, “If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, ‘Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?’ By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.”

Giving the success of Amazon, this is a piece of advice we should all heed. For marketers, the key to making this approach work is “conviction.” It means doing your homework, having the facts to support your point of view, and the courage to take a risk. Going fast brings with it the risk of failure, but as Bezos states “being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”

And Mr. Bezos knows a thing or two about flying fast. On the day he released his annual shareholder letter, Amazon stock closed over $900, up 50% over the year. Need any more proof that this “maverick” got it right?