Amazon.com has cancelled all plans to advertise on TV this year, claiming the money could be better spent elsewhere.
The etail giant, which is also abandoning most print advertising, has even taken the step of dissolving its five-member ad team, moving the employees to other duties.
Amazon’s TV spend came it at just under $50 million (€46.4m; £30.7m) last year, including long-running campaigns confined to Minneapolis and Portland (Oregon) in order to assess whether television ads were boosting sales in those regions.
According to chief executive Jeff Bezos, the TV campaigns did improve business, but not so much as to make the expense worthwhile.
As a result, Amazon will divert its promotional spend into reducing prices, not least by offering free delivery for orders over $25.
“Over the last couple of years, we have come to understand how low prices drive volume,” Bezos declared. “We think we get a better return giving the money to customers instead of television networks.”
The offer of free shipping will cost Amazon over $100m in 2003, a sum the online titan hopes to make back in increased sales. As for letting people know about these promotions in the first place, Bezos added: “Word of mouth is very powerful.”
Amazon will maintain some advertising activity – it will continue to use online ads and circulars in Sunday newspapers – but Bezos defended the decision to stop TV investment altogether.
“By eliminating the whole activity of doing broad-scale television advertising it simplifies things,” he explained. “We don't need anyone to figure out what type of TV campaign to do.”
The decision is a blow to Amazon’s agency, Wieden & Kennedy. The agency – which Bezos admitted “has done a great job” – will be retained for research and certain other projects.
Data sourced from: New York Times; additional content by WARC staff