Topics Covered: January 16, 2023
- Brands spending more ad budgets with Amazon
- Brands accelerating growth on Amazon
- Generative AI on retail
- Case Study: How 3P sellers get exclusive product
- Instagram kills shopping tab
- Twitch ad innovation
- No boundaries in eGrocery
How are brands adjusting their Amazon ad plans in '23?
eCommerce leaders face an increasingly complex decision set with Amazon Advertising in 2023.
While Amazon continues to offer unprecedented scale, measurement, audience quality and inventory options compared to peers, its growth is slowing, ordering pattern volatility has increased, and there is more competition from other retail media options.
This complexity is layered on top of a capital markets environment stressing profitable growth.
There’s never been a moment quite like this.
To remove, or at least reduce, the question marks, we benchmarked 51 consumer brand and agency partnerships on their Amazon ad budget plans. Respondents…
- …ranged in size from small (sub-$10mm in annual sales on Amazon) to large ($50mm+ in annuals sales).
- …came from several categories including FMCG, hardlines and softlines.
- …were categorized as Amazon Outperformers if they were gaining share, accelerating their growth, or generating outsized profitability on Amazon.
Those managing retail media, Amazon Advertising, or running the Amazon account for their business can...
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For the Nerds
Generative AI on retail: Ben Thompson, the most influential strategy analyst in the tech world, estimates generative AI that has come to market recently (DALL-E, ChatGPT, MidJourney, and Stable Diffusion) is an entirely new epoch in technology.
This lengthy article examines how Amazon, Apple, Meta, Google, and Microsoft are or will be impacted by AI. For Amazon, it’s less clear to Thompson how AI consumer use cases will impact the way in which brands do business with Amazon.
Kiri Masters, Head of Retail Marketplace Strategy at Acadia, had a really interesting article suggesting seven practical ways brands and agencies can start experimenting with it.
Thinking about and experimenting are the key terms here. Read articles like the ones linked and start to ideate on what this new epoch means for retailers and consumer brand businesses. (Stratechery)
Managing Amazon’s marketplace: 3P sellers gained access to a brand’s product despite it being Amazon-exclusive product, full return rights in place, and brand registry.
A combination of potential factors can lead to this situation:
- Limited impact of Brand Registry to mitigate sellers who have lawfully obtained product and are not making inaccurate claims
- Full return depots causing Amazon to liquidate inventory instead of return to brand
- Profitability concerns at Amazon 1P driving them to hold less inventory
- Ability for sellers to have an economic opportunity if items discounted either via one-time promotion or subscribe and save
All that to say, a great post with comments for any brands dealing with distribution issues on Amazon.
Brands may start to see more issues like this on Walmart as it continues its marketplace push. (LinkedIn)
Instagram kills shopping tab: Instagram announced it is moving its Shopping Tab off the main app navigation bar in February, although brands can still have a shop on the app.
This cements Instagram’s updated strategy of moving on from direct commerce on its app. Despite the theoretical rationale for social commerce to work – discovery happens there every second – U.S. consumers have not been convinced (at a large enough scale) to buy on these apps.
In China, social commerce is big. Douyin (Bytedance’s Chinese equivalent to TikTok) did $208B in direct sales and TikTok has commerce ambitions in the U.S.
But the linear version of social commerce, meaning in-app checkout, just hasn’t resonated at scale in the U.S.. Is the TikTok feed different enough to change that or will U.S. social commerce be less direct, a combination of influencers, video and marketplaces that complement each other rather than compete? (Instagram)
Twitch ad innovation: An example of overlay ad capabilities on Twitch advertising via Amazon DSP.
Amazon DSP is poised to gain greater share of brands’ Amazon ad budgets in ’23, driven by general growth in adoption of retail programmatic, insights that are coming from Amazon’s analytical tools like AMC, and also via innovation on ad formats like this one.
Why wouldn’t there also be opportunities for ad units like this on streaming TV or social media feeds? (LinkedIn)
No boundaries in grocery: JackBe, a start-up online pick-up only grocer in Oklahoma City, opened its doors parking lot this week. The model enables customers to order groceries via app and pick-up the order any time between 8am-8pm rather than having to choose a particular pick-up time. It also claims 100% in-stock on items selected (i.e., no substitutions).
The value proposition claims of greater pick up flexibility and eliminating substitutions highlight two significant friction points with eGrocery today. But the broader point in highlighting JackBe is the expansion of business model opportunities that have emerged from the pandemic.
It also demonstrates confidence, at least among these two co-founders, on the viability of online only models, which came under attack in ’22 from the return to store narrative. JackBe is targeting 10% EBITDA margins long-term, and 7% in the first year as the image above shows.
It’s not difficult to imagine JackBe’s grocery giant rivals opening similar concepts, fundamentally changing commercial real estate strategy, last mile delivery, assortment decisions, packaging requirements, and other legacy mental frameworks. (The Oklahoman)