This post is by Chris Pollock, Account Director, Paid Media at iProspect UK.
Where would you begin a product search? Google? According to Forrester Research UK's recent '2015 Consumer Technology' report, more consumers now start product searches on Amazon than any other search engine.
Now, if you're anything like me, this will not be as surprising as it may first appear. Over the past 12 months especially, the digital retail and marketing sectors have made a massive leap in terms of what it can offer brands and consumers online. However, if you look at Google, as the leading search engine, it has become increasingly stagnant compared to other platforms across the digital sphere in terms of new product development within the online retail space.
Social media platforms like Facebook and Instagram are increasingly looking to expand their e-commerce credentials, introducing new ways to buy, advertise and engage without leaving the site. However, Google has been slow to adapt to this rapidly changing landscape in areas such as cross platform attribution. Now the search giant is starting to feel the pressure grow, as consumers increasingly make the move to nimbler and more forward thinking online retailers.
With huge financial firepower and a monthly unique user count which exceeds 70 million in the US alone, surely it was only a matter of time before Amazon began to invest in its search capabilities. Where better to start than within its own platform?
Following the success of a private beta test which began back in May, in which iProspect was the only agency enrolled, Amazon has recently launched its newly defined Amazon Marketing Services (AMS), not to be confused with Amazon text ads that are replacing product ads which is ran out of Seller Central, a different offering all together. A move that allows brands and advertisers to run two separate types of ads on the platform, Product display ads and headline search ads, to help drive traffic to internal SKU specific landing pages. These ads will be triggered by Amazon's new algorithm, allowing brands to target ads based on keyword searches made by consumers on the platform. What this means is that headline search ads will be displayed prominently above the search results in Amazon's promotion specific stock keeping unit (SKU).
Of course as with most search platforms advertising will be cost performance based, but retailers will have the capability to connect directly with shoppers lower down the purchase funnel. Targeting those shoppers who are already in that "shopping mind-set". As a result of greater search capabilities on a platform with strong brand purchase equity there is potential for effective results. What also plays to Amazon's strength here is that during the beta test the search results reported cost-per-clicks substantially cheaper than Google at around £0.07 in the 'laptop' category, with return on advertising spend in excess of 8000%. Now that Amazon's marketing service is out of the beta and open to anyone to join, competition has increased, resulting in higher CPCs.
The fact that Amazon can offer the potential for retailers to reach customers so near the end of the purchase journey gives it a big advantage over Google. Although Google has customers with the same intent, the number of higher funnel customers affects return on advertising spend. This means a potentially cheaper and more effective option for online retailers.
Google ads draw in over £30 billion annually but it needs to start operating in the retail space or profits could decline. There are already third party platforms seeking success in this space, and Hook Logic, a global leader in performance marketing for brands, is a great example agencies and brands starting to make strides outside of Google and is quickly gaining large market share, especially in the US. There is also eBay, but the auction site lacks the correct set up to really drive revenue for brands.
Like any new platform Amazon Marketing Services has its limitations, but Amazon will no doubt make quick progress to update its technology as the project moves into live testing. Once its new ad system tests its legs, Amazon could even look beyond its own website and expand into producing content on other websites.
Amazon is set to become a major player in online retailing sector and, based on what we've seen so far, it's just a matter of time before we see retailers and agencies starting to 'add to basket'.