Amazon

A Jungle In The Desert

A Jungle In The Desert

Can Amazon shake up the digital ad industry in the Middle East like it has done in the US?

Originally featured in the March 10th 2019 issue of Campaign Middle East magazine

What comes to mind when you think of Amazon? Maybe the world’s biggest online retail platform – the ‘everything store’. Or perhaps it’s consumer products like the Alexa-enabled smart speaker and Kindle e-Reader, or an army of delivery drones and warehouse robots that are revolutionizing retail logistics. Or maybe even as one of the world’s biggest cloud hosting platforms. Truth is, Amazon is a lot of different things to a lot of different users. While its online marketplace might be what the company is best known for, Amazon makes money in a lot more ways than just taking a cut off products sold on its site.

One such way is its burgeoning digital ad business, a platform that is beginning to mount a serious challenge to the current duopoly of Google and Facebook. Amazon is gaining traction charging companies to promote their products on both the Amazon website and a growing display network across the web. Brands can pay to feature their products prominently in product searches, on individual product pages, and also as regular display ads for products for sale on Amazon itself and even on third-party sites.

In 2018, Amazon made $10 billion from its ad platform, a massive jump from $2.8 billion in 2017, making it the third-biggest player in the space, behind only Google and Facebook. To put it in perspective, Amazon’s $10 billion in ad revenue still considerably trails Facebook ($56 billion in 2018) and Google (a whopping $137 billion in 2018), although the fact that this vertical has grown so quickly over the last couple of years is a hugely impressive.

While these two Goliaths are far bigger currently, the advantage that Amazon has over them is that users actually shop on Amazon rather than just search the web as on Google, or browse social media as on Facebook. As such, their ads are seen in places where the user is in an active buying mindset. And while other platforms know what users are searching for or looking at, Amazon knows what they ultimately end up buying. Such information can be incredibly valuable to brands willing to pay for the right placement. Another trend that’s working in Amazon’s favour is that consumers are increasingly starting online product searches directly on Amazon instead of Google. This increased search traffic is attracting third-party sellers and the ad placements available give them a unique opportunity to usurp rivals at the point of sale, even when a customer searches directly for a competitor.

While Amazon’s ad platform is still less sophisticated than its rivals, it is constantly improving and recent months have seen a slew of new features that make the platform more robust and easier for advertisers to use. The company has been expanding a self-service option for ad agencies and brands to take advantage of its data on shoppers, which includes hundreds of automated audience segments, as well as targeting based on shopping behavior and customer demographics. To make it less confusing to brands, all advertising features have recently been folded under the Amazon Advertising umbrella, echoing a similar move by Google last year. Through its dominance in e-commerce in the US, Amazon has become integral to the advertising industry there. Brands are threatened by its power, but also know that they have to maintain a presence on the site or risk being marginalized, and one of the best ways to get seen now on Amazon is to buy ads.

Since acquiring Souq.com for a rumoured $580 million in 2017, Amazon has been relatively hands-off, at least from a consumer perspective. All that looks set to change, however, as the company gets ready to shutter the Souq.com site and rebrand as Amazon.ae in the UAE, later doing the same in Saudi Arabia. The revamped site would look similar to Amazon’s other international websites, like Amazon UK or Amazon Germany, giving it a more unified appearance and brand in the region. The new platform will also be better-integrated with the same logistics and seller back-end system as the US, which will presumably include integration with the growing ad network too. The Middle East e-commerce sector is growing at a rapid pace with online sales expected to double to $48.8 billion by 2021 according to a report by Fitch Solutions Macro Research. With more people shopping online, and starting the product search directly on these large e-commerce channels too, brands will need to maintain their presence there if they want to be seen. Assuming that these capabilities will soon be available in the Middle East, this presents an opportunity for forward-thinking advertisers in the region who are willing to try something new.

Posted by Rob in Advertising, Amazon, Campaign Magazine, Dubai, e-Commerce

How Voice Search Might Impact eCommerce

Originally featured in the February 25th 2018 issue of Campaign Middle East

Long before the smartphone, the television, the radio, and even the printing press, we relied on our voices to communicate. These days we spend more and more time with our faces buried in a screen, although if you were to believe the tech press hype, all that might soon be about to change. There is a voice-powered revolution happening, or so we’re told.

Sales of voice assistant devices like the Amazon Echo and Google Home spiked last year and are expected to grow exponentially in the foreseeable future. With smartphone ownership long past saturation point, the big tech players see voice as the next great frontier for how they might embed themselves into our lives.

And rightly so. Google says that 20% of searches on Android devices in the US are currently done by voice, and ComScore expects voice searches to rise to 50% of all searches by as soon as 2020. You can almost hear brands scrambling around to try and come up with a ‘voice strategy’. But are we getting a little too ahead of ourselves?

How all this will affect advertisers exactly is still very much up in the air. While these stats seem staggeringly high, it’s important to unpack the different types of voice search taken into account here. These stats include using voice as an input to serve up results on a smartphone screen via Apple’s Siri or Google Assistant for example. While we might search differently when using our voice compared to typing a search into our phone, this method ultimately still produces a list of text-based results that can be scrolled through and pondered over.

The real disruption will happen when we also get the results coming back to us through voice. Unlike text-based search, the number of results that a voice platform can serve up will be far fewer. Gone are the pages and pages of listings that can be facilitated through a screen. This is bound to refine the types of searches we make, but also the types of responses we are given in return, fundamentally changing how search works.

For example, instead of searching for “pizza places in Dubai” and being presented with a list of the nearest pizza restaurants, unless you know specifically where you want to order from, you are likely to be presented with only two or three of the most popular options. How Google or Amazon etc. decide on these options will have drastic knock-on implications for businesses. Depending on how well these platforms know you, they can tailor options to your tastes and purchase history etc., but this could make it increasingly difficult for brands to influence the process.

All of this might sound worrying for marketers, but if we look back to the current usage of voice-assistants it’s clear that we might be a bit further off this reality than some would have you believe. The vast majority of interactions with these devices at the moment are to carry out mundane tasks like playing music, getting the weather forecast, setting a timer or asking generic questions. When it comes to actually using these devices to make a purchase, this is still very rare. A recent Business Insider Intelligence survey of 1,000 heavy voice-assistant users found that only 9% had ever used voice commands to actually buy a product.

Some first-mover brands in the US that have gotten a march on their competitors are the likes of Starbucks and Domino’s pizza who have launched Alexa ‘skills’ over the last couple of years. These skills are still quite primitive though and usually only facilitate re-ordering a designated item and having to use a specific trigger phrase to do so.

While voice may not ultimately replace all e-commerce, it could especially revolutionize ‘replenishment purchases’ such as toothpaste or toilet paper, products that can be re-ordered without too much consideration. If your brand can become the default for your customer when she says, for example, “Alexa, buy more washing powder”, this can put you in a very strong position when it comes to customer retention.

Ironically, many of the brands that will reap the benefits in this new landscape will be those that have built up their brand outside of these platforms, maybe even on – shock, horror – traditional channels. So much so, that they are top-of-mind and that consumers actually request them specifically on voice platforms, or have them set as a default order.

While we’re yet to see how ads might be facilitated on voice platforms, Amazon have been in talks with consumer companies like Procter & Gamble and Clorox about paying for higher placement if a user searches for a particular type of product, as well as targeting users based on past shopping behavior to cross-sell complimentary products to them. How will all this play out over the coming years? We’ll just have to wait and see. Or perhaps more accurately, listen.

Posted by Rob in Advertising, Amazon, Apple, Campaign Magazine, e-Commerce, Google

Google shows off its Artificial Intelligence chops at I/O 2016

Google’s annual I/O event took place last week and it’s pretty clear from some of the most high profile announcements how seriously the company is taking Artificial Intelligence as a platform moving forward. One hardly surprising reveal was the launch of a home AI assistant similar to Amazon’s Echo, imaginatively named ‘Google Home‘. The Echo has been a bit of a sleeper success since it hit shelves in selected markets last Summer and it isn’t much of a shock that Google wants to get in on the action too. It’s not scheduled to ship until the end of the year but it looks like the concept in general is meeting with consumer approval at least.

While Amazon and Google are making headway in this space, you’d imagine that Apple (much more of an actually established hardware manufacturer than the other two) might be waiting in the wings, ready to launch something similar. But as pointed out by Marco Arment, this type of device, despite being a tactile consumer tech product, is much less about the hardware, and much more about the software platform behind it. If an AI voice-controlled interface takes over from a 5 inch smartphone screen as the preferred input method at some time in the future, Apple could be truly blindsided. I’m sure they could use some of their $137 Billion war chest to acquire a suitable AI platform though so I doubt Tim Cook is losing any sleep over it.

Another AI-based product that was showcased was a new messaging app called “Allo” that suggests responses to questions. The potential here is not so much as a standalone app, but for integrating predictive search and suggestions into messaging in general.

Posted by Rob in Amazon, Google, Internet of Things

Amazon has Square & PayPal in it’s sights

Following my post from last week about the imminent entry of the big tech giants to the mobile payment space, it was timely that another one of The Big Four made public their intentions. During the week, Amazon made it clear that they also want a piece of the pie and announced that they plan to launch a suspiciously Square-like mobile card reader and app platform called Amazon Local Register.

And guess what? – they plan to undercut Square and PayPal on the fees they charge retailers by a whole percentage point (1.75% to Square’s 2.75%,and PayPal’s 2.7%). No surprise there then as Amazon have certainly been upping the ante recently when it comes to throwing their weight around, brazenly squeezing their suppliers. They also take a swipe (get it?) at Square’s perceived lack of retailer support by highlighting their ‘awarding-winning’ customer service.

Let the games begin.

http://www.youtube.com/watch?v=M6YXllIqD_E

Posted by Rob in Amazon, Mobile Payments, Retail, Square

The convergence of The Big Four tech giants continues

With leaked reports this week suggesting that Amazon are readying a smartphone to launch in the Autumn, it marked yet another example in the recent trend of the big four tech companies, Google, Apple, Facebook & Amazon, continuing to move in on each other’s turf. It seems that Amazon want a piece of the smartphone pie and feel like they have something to offer in this space in the hope of emulating Apple’s model of users being able to use an Apple device to buy Apple products via an Apple payment system (iTunes). This isn’t a new trend but definitely one that seems to have sped up over the last few months with Computer World highlighting the number of recent moves that have made these companies “a lot less like themselves and a lot more like their competitors”.

Even Twitter are getting in on the action. Just last week the company rolled out a new profile page to some users, giving images more prominence, displaying posts based on their level of interaction and generally continuing the ‘Facebook-ification’ of the platform. All this in addition to reports last month that the company was preparing to get rid of the hashtag and @reply features that have been such symbols of the platform up to this point.

In a similar vein, it seems that Facebook is hoping to diversify from social like Google has managed to diversify from search with the company recently engaged in some very Google-like ‘moonshot’ ventures like investing in virtual reality and drone hardware manufacturers that have nothing from the outside to do with their core business. It has also been reported this week that the company is currently testing out an e-money system in Ireland which, if it were to prove a success, could possibly muscle in on Amazon’s online retail business or the potential of Apple’s iTunes in the micro-payments space.

So it looks as though these companies will continue to diversify from their original core business and borrow elements from each other, all with the aim of trying to expand their customer base and keep users within their ecosystem. But are all these measures diluting the elements that made users love them in the first place, and what are the implications for us, the users, of having our lives and our habits influenced and monitored by such a small group of companies?

Amazon Smartphone

Image courtesy of Mashable

Posted by Rob in Amazon, Apple, Facebook, Google, Twitter