Amazon has long been depicted as a scourge of offline retail; the demise of famous retail brands have been attributed to its own inexorable rise. However, an advertising model pioneered by Amazon offers vital lessons for legacy retailers such as Walmart, enabling them to monetise online and offline customer behaviour data in the form of search advertising revenue.
It all boils down to the “flywheel” concept, a mechanical metaphor to summarise the manner in which Amazon is able to achieve continual growth as a result of a virtuous circle of positive customer experience, seller satisfaction, reduced costs and lower prices. And in recent years, Amazon has added an additional layer to this model: advertising.
E-commerce retailers possess rich user data, including all-important ‘signals of intent’ from previous search behaviour. Physical retailers have an additional advantage in the form of insights into in-store purchase activity. Combined with brands’ own first-party data, this assists the placement of highly-targeted native search ads for products which can be purchased in digital or physical environments.