Summary: 50% of consumers go straight to Amazon when searching for a product. We skip Gooogle altogether. In fact, Amazon is now the third biggest beneficiary of advertising dollars in the US behind Google and Facebook. Mark Power, CEO of Podean, sat down with Dave Currie, CEO of Winmo, on another episode of the B2B Sales Show to provide more context into what advertisers, sellers, and marketers should know through this monumental shift.
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Host, Dave Currie: So what’s the big deal about Amazon advertising? This is certainly a topic that is close to home for many of us in the advertising industry. Demystifying it is the purpose of today’s podcast. We’re going to be joined here in the studio by Mark Power, the founder and CEO of Podean, the Amazon advertising experts. So welcome to the show, Mark.
Mark Power: Thanks Dave. Really happy to be here.
Currie: So there’s been, as you and I have talked about over the last several months, there’s a lot of mystery that surrounds Amazon and more specifically mystery around Amazon advertising and the potential impact that’s having in the marketplace. So Mark, tell us a little bit about, from your perspective, how does this come about and what this means for the future of advertising?
Power: Yeah, well it’s actually quite unbelievable, just the size and scope of Amazon’s advertising business now. Just to put it in perspective for everyone, in 2018 it was a $10 billion revenue business. Which I think in the world of Jeff Bezos, when you start to become a $10 billion business, all of a sudden you’re on his radar, but for us in the advertising industry, that is a formidable force. That means a lot of brands and companies are spending money on that platform.
Power: So it’s taken them about seven to eight years to get to that. And a lot of those dollars though have been spent by sellers on the Amazon Marketplace.
Currie: Right? And those are the types of companies that as consumers, we’re all too familiar with.
Power: Exactly. There are people who they might be third party sellers who are selling a range of different products who are using Amazon sponsored ads platform to bid for our attention, okay? And just the same as Google Ad Words. Amazon has taken that model and applied it to their marketplace. But essentially the vast majority of the dollars has been within that pay click space in the search space.
Power: So Amazon is now more than 50% of product search in that world of Google, really, so they’ve taken over Google for product searches. So more people in the U.S. in particular now use Amazon to search for products than they do Google. So then Amazon is taking dollars to promote various folks based on their algorithm, promote various products based on, the bid, how profitable it is for Amazon. There’s a whole range of factors, but there’s a huge amount of dollars going into Amazon’s platform. But over the last few years that has really accelerated and the growth has been quite unbelievable to the point where Amazon is now the third biggest beneficiary of advertising dollars in the digital space.
Currie: Certainly a shift that we’ve seen in the press and I think that what’s most interesting to listeners is sort of, okay, so what’s really changed and what does it mean for more traditional advertisers and brands as they’re entering this new marketplace?
Power: Yeah. Well traditionally, if you’re a seller, you used to go and put your products on Amazon and then the search bar would be your friend where someone would look for a particular product or your brand and up, up you come. Advertising comes along, all of a sudden people can be against you. You’ve got competitors trying to bid to the same words.
So it’s really a pay to play platform, all right? So if you’re not prepared for that, you can be in a world of hurt very, very quickly where people are bidding against your brand. You’ve got companies who are more advanced on the marketing side who are actually winning, even though it’s your category traditionally off the marketplace.
Power: So there’s a lot of challenges, which it would take us a long time to really get through all those challenges. There are lots of resources out there for sellers and brands to explore on how to do that. And there are lots of partners, like agencies like ours. We help companies with that. But where Amazon’s going is it’s way more than just that place where you search for products.
Power: It now has a very vast display and video serving ability. So what that means is Amazon allows you to just like you would using Google and other platforms, allows you to essentially serve display ads, serve video using the Amazon data to target people so it knows exactly what I’ve been buying for the past several years whilst I’ve been buying on Amazon and brands can now use that data to then target me or target any of us with particular ads that are relevant for us at particular stages of a journey, not just on Amazon’s owned and operated properties, but on the third party partners that they also have.
Power: And that might be large ad networks or large publishers that they’ve now partnered with and that that data is really the secret sauce of Amazon’s advertising.
Currie: Yeah, I think it is. We’ve talked about in the past, it’s one of the areas of true attribution that Facebook and Google can’t really get to, which is that final purchase data to really [crosstalk 00:05:32].
Power: It’s incredibly powerful and it’s a marketer’s dream. The marketer’s dream is not just to have performing marketing and sales, but it’s to know where their dollars are going and what those dollars are returning. Because a marketer, to be able to go to a chief financial officer or a CEO and say, “look at the performance that we’ve delivered and the sales that we’ve delivered” and be truly accountable for those, there’s a lot of messiness that currently in this world of digital and offline marketing that you’ve got to organize, but at least with Amazon, every dollar you put in, you have a good chance to understand what dollars you’re getting back. And that’s quite unique from a platform perspective.
Currie: It’s got to be somewhat of a threatening proposition to those who may be listening that are in ad sales or more of a traditional agency model where they don’t have the tools and capacity to be able to compete with this new marketplace. So what do you see, when you’re talking to, “Look Mark, you’ve come out of the network agencies and so forth, and you’ve worked with brands directly and you still do today.” What are some of the challenges that more traditional frameworks of agencies and ad units or you know, how are they competing in this space?
Power: This is a really interesting topic. I’m writing a book right now called, “Amazon for CMO’s, and one of the topics in this ever-changing world that we live in, right? And unfortunately, it’s not just that this world of digital is just all of a sudden so… It’s maturing and it’s also very complex to navigate. But we’re now in a world of all guns. So only a year or two ago, brands didn’t have to worry about Amazon because if they didn’t sell on Amazon, they’re like, “Oh, I don’t really care.” But now Amazon is a formidable, very, very vast advertising platform and opportunity that they need to get their head around. But it’s another walled garden where your targeting Amazon customers, not your customers.
Power: Just like Facebook, you’re using, you’re putting money into Facebook or you’re putting money into Google, but they’re Google users, their Facebook users. Now you’re spending a growing amount of your budget on Amazon, but it’s Amazon’s customers and Amazon’s not going to give you those customers back. So it’s more power to the platform, but it will become addictive just like Facebook and Google did just because the data is so powerful and the eyeballs are there.
Power: And so that’s a challenge. But you’ve also got, as we move towards this, so what I call a multi-walled garden management sort of scenario. Soon you’re going to have, AT&T has its own ad tech stack. Soon you’ve got Verizon actually becoming a serious player, which they actually already are. Disney, Netflix will start actually serving ads no matter what they say. The only way that they’ll be able to really scale in the future and grow in the future with advertising. So there is this walled garden world and at the moment though, Amazon is the flavor of the month of the year, just because it’s new. And even if you don’t sell on Amazon, you can actually harness the power of its data to serve the right message to the right person at the right stage of their buying journey.
Currie: And are you finding, in your experience, working directly with brands that those who have traditionally sold through retail channels or retail partners and more suited towards selling their products to someone else’s customer set versus someone who may have a direct to consumer model?
Power: That’s an interesting question. Some retailers are a little bit too late. They’ve left Amazon to partners to manage, or third parties to manage and other distributors and all of a sudden they’re too late and their brand is all over the place and they don’t have control of their brand and control of their product.
Currie: Who’s doing it right?
Power: You’ve got some good traditional players who grew up on Amazon, the GoPro’s of the world, Fitbit’s of the world. They’ve realized early on that their electronics in their category is a very important one for Amazon. Some CPG’s like Unilever’s and Procter and Gamble’s, they’re finally realizing after several years that we’re now buying groceries and staples on Amazon. It’s not like the grocery, we’re getting things delivered and so there are categories that are a little bit late to the party, but at least they’re realizing it. When I advise CMO’s and senior folks, there is only one failing strategy whether you sell on Amazon or not.
Power: And the only failing strategy is to not have a strategy. So you need to have some form of strategy as to how you partner with Amazon in the future because it is not just a marketplace. It is now an extensive set of properties, it is an extensive place full of content, whether it be audio content, voice experiences through to Amazon Prime and everything that comes with that. Like Amazon just is just continuing to expand and touch just many parts of our day to day, touch many parts of society, and embed itself in our culture. And for a brand to ignore that and say, “Sorry, I don’t sell on Amazon so I don’t need to worry about it.” That is a failing strategy and that’s something that we’re advising everyone is just to think what is the future, and how do we partner with them better?
Currie: Yeah. I think it’s what we’re seeing is from a sales intelligence perspective at Winmo is that we’ve got hundreds of users or ad sales reps growing in the Amazon ecosystem on an annual basis, which sort of is a key indicator that they’re continuing to invest in building out the infrastructure of the advertising platform, or media type, media properties side of their business. So you can even go as far to say that their delivery trucks, you’re starting to see ads be placed on the boxes. It’s huge. It’s beyond digital. It’s gone into out-of-home and that’s just the tip of the iceberg, right? You’re seeing it on TV as well.
Power: Yeah. It’s going to change the TV landscape. The TV landscape is already changing, right? Which is great for everybody, really, who wants to sit in front of the nightly news and watch another five or six pharmaceutical ads, okay? Really like why not some targeted advertising whilst we watch TV, or something that’s specific to me or my family and why do we need to watch linear ads anyway? Why can’t we have more interactive ads that do cool things, right? So I am all for TV, traditional linear TV ads to be disrupted but Amazon is way bigger than just digital and TV.
Power: It’s also got things called treasure trucks, which you know brands can partner with them to go to places and find new customers with offers and special deals. They’ve got a very extensive set of solutions for the automotive industry, which I’m working in right now where you can partner with them and use their whole infrastructure to help give people, give certain brands within your portfolio, put it in the hands of consumers, and one example is with automotive you can organize through their Prime Now Platform, a test drive of a particular car within two hours.
Power: If the automotive group is signed up to that. Now that’s… Who wants to go to a car dealer anymore? I don’t, I’d rather the car to come straight outside and Amazon to manage that whole experience and the reason why brands are putting their trust in Amazon is that Amazon knows how to reduce friction. It’s customer-obsessed and just like Uber and just like other successful companies, when you reduce the friction for a consumer, they will be passionate about you. They will make your life easier.
Currie: I couldn’t agree more. Look, we’ve just gone through Amazon Prime Days, we’re in the midst of summer and it’s one of their most successful days of all time, one of the biggest retail days of all time.
Currie: Any initial feedback that’s come back from Amazon as a partner, as to some of the categories that really popped?
Power: Well, it’s funny. I think the interesting thing is this recent Prime Day has been very successful, but you really do need to be a big boy to play the game. And just because Amazon, it’s about scale. So the bigger the brand, the bigger the budget, the more love Amazon gives you. So if I went to Amazon, which I did with some mid-sized clients, what’s their advice? Spend more, spend more on advertising, have enough inventory available, but you need to spend more to make sure that inventory sells. But that’s their attitude. It’s pay to play on the platform. They’re now A very, very sophisticated sales machine. They make a lot of money, they’re going to make more, but it is a pay to play platform.
Power: You can do some cool things, but everything that is designed to do is to make more money for Amazon, okay?
Currie: So I guess one of the questions on everyone’s lips is going to be, so this is where Amazon is now, there’s been a rapid progression in both the platform and the advertising side of the business. I mean, the obvious question is what’s next?
Power: Well just think of a Google competitor, a true Google competitor. Okay. Yes, Facebook’s only social and it’s got some incredible properties and messaging and Instagram and et cetera, but actually it’s pretty good that we’ve got a Google competitor coming. Like how, I don’t think a single person, this thing, this podcast has not had to spend with Google in some way or their business is not… It’s essential to the marketing mix so to actually have a formidable competitor with the resources and scale of Amazon to come along and overnight say, “Hang on, we’re not just going to take you on with a product search.”
Power: What do you think next? I think they may take them on with full search. So you might actually use in the future an Amazon browser or an Amazon search bar, or use Alexa to search for things like a restaurant as you’re walking down the strip for the tee times of the golf course on the weekend, it might become way, way more integrated into your life than just buying certain things. But then you’ve also got, they’ve recently bought Sizmek, which is an ad serving platform.
Power: Amazon’s going to have a formidable end-to-end tech stack and one thing they’ll have over Google is once you put that dollar in, you’ll be able to know what comes back. But that’s a good thing because we need competition in the market because it helps us with our budgets, it helps those two big companies be more accountable, but I think competition’s good.
Power: But where things are really exciting is in voice. And when you think of Alexa, don’t just think of Alexa as voice-enabled soon it will just be Alexa is your persona and your artificial intelligence-driven persona that sits in the Amazon ecosystem.
Currie: Right. And we’re starting to see Alexa go be installed into new model vehicles in 2020 and so forth as well. You’ve basically got the two voice, or three-voice sides with Google, Apple, and Amazon all competing for that dash space.
Power: Exactly And not only will Alexa know what we’ve bought, and what we do, and what kids we’ve got, and what things are in my life. But it will really start to know what I am and what I like in content and lots of other things. And Alexa won’t just be something enabled through Echo devices.
Power: It would literally be my virtual being within the Amazon ecosystem and beyond. And that’s quite powerful. And in-car, Alexa, powering in-car experiences is going to be very powerful as well. Or I think we will forget just, Americans, I think a huge amount of our time is spent in-car. So there’s a huge opportunity to make that a better experience and Alexa is really leading the charge there. So I think there is just going to be a lot of action in this space and Amazon actually coming into, not disrupt advertising, but to shake it up a bit, to shake it up a bit to sort of make the Google sort of, “Oh golly, you know, I can’t just sit on this incredible …” It’s been a duopoly.
Power: Having that sort of competition’s great. And it’s also going to be great to see where things go when it comes to sort of how Amazon lets its customers, in the form of brands, use data that is traditionally been fully proprietary to Amazon, how it shares that data. I think there’s going to be some good developments in that because I think Amazon will start to loosen up its grip on data as long as they have the… because of all the platforms out. Amazon is the most brand-safe and that’s something we didn’t touch on today is the brand safety mechanisms and the guidelines Amazon has set is really strict so all the problems that Google and Facebook have had and are currently still having, aren’t existing in Amazon because they’ve been so customer-obsessed, kept that customer data under lock and key, but in the future I think they’re going to be able to do a lot more with it when they collaborate with brands.
Currie: Mark, we’ve talked a lot about the advertising side of Amazon’s business, but there’s also the up and coming and fast-moving side of their business-to-business application. Can you talk to us a little bit about that? What’s going on with that?
Power: Well, the business-to-business side of Amazon up until now has been, “Okay, how can we facilitate better commerce between companies that sell business-related items and collateral and stationery and all sorts of things like that to other businesses”, right? But where there’s a huge opportunity for Amazon is to reduce the amount of friction between business-to-business commerce, just generally. The amount of friction and trying to shorten sales cycles, trying to make the whole contract and exchange of legal documents and all these things. Just how to make that a more fluid and frictionless process.
Power: I see Amazon as a big conduit to changing and disrupting the traditional business-to-business sort of our landscape with applying Amazon methodologies and that whole customer obsession to the world of business and they say I think a couple of trillion dollars is the business-to-business market as if Amazon doesn’t have its sight set on that. It does. It’s already stated it does, but it just hasn’t gone hard into it yet. It definitely would have teams right now over in Seattle or elsewhere, really working out the plans and methodically making sure that they’re testing and learning and seeing and partnering with the right folks.
Power: But you start to make a dent in that multi-trillion dollar business and business-to-business commerce. I cannot give you what the vision looks like yet because it’s still something I’m exploring. But that is just breathtaking when you think about it. Imagine if Amazon came in and said, “We’re going to make the whole world of business-to-business an easier place for people to transact and do business in”, and who knows what that’s going to look like. But I wouldn’t put it past them to heavily disrupt a lot of the areas of business-to-business over the next few years including…
Power: And then the same goes for medical and insurance and other areas that they’re wanting to attack.
Currie: Yeah, I think it’s pretty safe to assume that having no strategy is not a strategy for anyone in a business setting in today’s environment, whether that be in the advertising and marketing sector of the economy or any B2B and commerce factor of the economy both here in the U.S. and globally moving forward. Mark, that’s been incredibly insightful. Thanks so much, mate, for spending a bit of time and sharing with us some of the expertise that you’ve accumulated over the years and putting to work with your agency Podean. Really appreciate your time today.
Power: Thanks, Dave. And yeah, thank you, everyone, just keep your eyes and ears open about this world because there’s a lot to learn from the way Amazon does its business and there’s a lot of opportunities out there with it too.
Currie: Great. Mark, how can someone get ahold of you if they want to ask more questions or if they’ve got a topic that they really just like your perspective on?
Power: Oh, just reach out on LinkedIn. Mark G. Power is my name, or go to podean.com. P-o-d-e-a-n- .com and you can find me there.
Currie: That’s great. Thanks very much, mate.
Power: Thanks, Dave.
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