With the Amazon Tsunami Upon Us, Marketers Must Develop Tools to Ride the Wave

By Jeff Bander, Head of U.S., Eye Square

If you ordered something online during the month of December, you probably noticed that America’s retail industry is heaving under the strain of increased e-commerce. From delayed shipping times and supply chain issues to out-of-stock products, the 2020 holiday shopping season took new shape as a result of the COVID-19 pandemic. With vaccines being deployed and the end of the pandemic hopefully insight, we can expect shopping habits to inch back towards their pre-pandemic norms; however, e-commerce will likely hold onto many of the gains in market share achieved over the past nine months.

The pandemic-prompted acceleration of online shopping comes on the heels of consistent, long-term growth in e-commerce. From 2014 to 2019, the global e-commerce market grew from $1.4 trillion to $3.5 trillion, and that number will soar even higher once final holiday sales are booked in 2020.

Of course, among many major retail players, one company stands at the center of all this growth: Amazon. 2020 was the year in which large swaths of the population committed to buying their household goods online—a market for which Amazon was well-prepared with its Prime Pantry for cleaning supplies, pet food, and basic groceries. As Amazon continues to take on greater importance, marketers must treat it as the vital channel it is. Many marketing agencies have entire teams devoted to their strategies for Google and Facebook, so when will they devote the same attention to the platform where the purchases are actually made?

Amazon’s unstoppable rise 

One could have predicted e-commerce’s ability to capitalize on a pandemic requiring social distancing and stay-at-home orders, but Amazon’s success over the past two quarters has exceeded even the most bullish predictions. The company reported a 37% increase in earnings during the third quarter of 2020, with total revenues of $96 billion. These figures come as the company continues to expand its dominance of a wide range of U.S. industries; nearly half of all online sales in the U.S. take place on Amazon.

Jeff Bezos’ retail behemoth is also making its presence felt in its own advertising spend, as 2019 was the first year in which Amazon was the world’s largest advertiser (supplanting long-time #1 Procter & Gamble). But with Amazon drawing more attention to itself, and with online shoppers spending more and more time browsing the platform, why aren’t external marketing efforts keeping pace?

Fine-tuning tools for e-retailers

Google and Facebook have eaten up a substantial portion of marketing budgets for the last several years, as both companies capitalized with their own ad units and targeting tools. Marketers make constant adjustments to their Google and Facebook collateral to ensure that they maximize their return on investment. But as Amazon elbows its way into the picture, smart agencies will need to take a similar approach to their Amazon ad spend. While Google’s search engine superiority has never been in doubt, a customer’s buying journey is often skipping the first step and starting directly with Amazon: more than 50% of product searches now begin on Amazon rather than Google. Marketers must test their creative materials in context and finally drill down on what works on the world’s most important marketplace.

Google and Facebook have long offered users the ability to test advertisements in a live environment, and this technology is finally being deployed to Amazon as well. With Amazon gaining on Facebook (claiming over 10% of digital ad dollars and counting), this testing and measurement tool is key to refining campaigns and making the most out of the addressable opportunities at their disposal.

High stakes

What do advertisers have to gain from investing more in their Amazon strategy? In short, everything. Increasing ad spend on Amazon and devoting more resources to testing and measurement give marketers a leg up at every step of the product cycle. Live environment testing allows unknown brands to pre-test their products and identity before launch, and to boost product visibility using hyper-targeted addressable solutions.

When it comes down to it, a marketer who isn’t testing their creative content in 2021 is doing their client a disservice. Live testing enables advertisers to optimize their spots, better understand their triggers and best executions, and increase the bang for their buck. In an era of ever-tightening marketing budgets, isn’t that the name of the game?