Exploring The Intersection Of E-Commerce And Advertising With Amazon: #AWX 2013

Hello and greetings from Advertising Week 2013! The morning of Day 2 welcomed Lisa Utzschneider, Vice President of Global Display Advertising at Amazon Media Group, to the stage as she explored with her crowd the intersection of e-Commerce and advertising – namely, how Amazon is mapping its own insights and takeaways from e-Commerce endeavors to its native advertising platform. Read on for a full recap.

Tess’s Summer Journal, Or, An Example Of How Ecommerce Expectations Are, By Now, Basically Innate

Lisa began with a story about her daughter, Tess, who one day expressed utmost eagerness about purchasing a summer journal. Lisa whipped out her smartphone and began searching for products (on Amazon) via keyword permutations of journal (diary, diary with lock, etc.). It seems this is just what Tess was expecting. Together, they reviewed the items, but the thumbnail product images were too small for Tess to appreciate, so they gravitated over to Lisa’s tablet and continued their e-Commerce journey from there.

“What do the people say?” she asked her mother. Lisa noted to the audience that that’s how her daughter referred to customer reviews– so she read aloud the ratings and comments from previous shoppers. Ultimately, they settled on a product, and with several clicks and swipes of a finger, Lisa had ordered the journal.

That night, as she tucked Tess into bed, Tess excitedly asked when it would arrive, how close it was. Though the purchase was only placed an hour ago, Lisa was able to hop back on one of her several devices and check in on the delivery status. She updated her daughter, and then turned to update her audience on just how old Tess was (is). Four. She’s four years old. And her expectations of a customer experience were (are) completely aligned with many adult consumers in the world today.

Lisa next moved into the three things her team at Amazon focuses on when they think about business:

1. We start with the customer and work backwards. We’re customer centric in everything that we do.
2. We innovate on behalf of our customers. We like to anticipate their needs before they know that they need them.
3. We think long-term. We aim to make the right decisions, and the right trade-offs.

“When we think about commerce and its growth,” Lisa noted, “well, it’s growing. This year, eMarketer puts e-Commerce sales globally at $1.2 trillion.” (Pause for jaw-drop. That’s huge!) And in the next four years, she continued, that figure is forecasted to double. Lisa pointed out that at Amazon alone, this year, they have 215 million active customer accounts.

Another significant factor in all of this is that consumers are moving in and out of devices like never before. They’re starting on a mobile phone and completing transactions on a tablet. She cited another statistic, that last year, nearly 80% of shoppers shopped on a tablet or a phone. Lisa thinks that this trend will likely continue.

Find, Discover, Buy

Amazon sees shopping as a three-prong process:

1. Find
2. Discover
3. Buy

She went on to elaborate on each prong. To paraphrase: Find… well, that’s pretty easy. I’m looking for the product I want to buy, and I find it. Buy… that’s easy again, I buy it. But it’s this middle phase, the discover phase, that’s essential. There is huge opportunity, both for marketers and for an e-Commerce platform, in this phase. Here, we can introduce consumers to new products and new brands they didn’t even know existed.

The way Amazon guides customers through this process of discovery is through  personalization, Lisa explained. “We transfer this process of discovery over to our advertising program. We optimize the discovery experience and translate that to the advertising platform.” It’s here where the concept of innovating at the intersection of e-Commerce and advertising is born.

When it comes to e-Commerce and advertising, we must first begin with their respective goals:

• E-Commerce: Goal is to make the shopping experience simple. “Shopping should be simple, it should be seamless. The goals that customers have [with shopping] probably won’t change ten years from now,” Lisa stated.
• Advertising: Goal is to inform customers about brands and products. There’s a pretty good chance that this goal won’t change over the next ten years, either.

It’s these two things that intersect at the customer, explained Lisa. She pointed out that the two goals aren’t that dissimilar if you look at them from the perspective of the customer. E-commerce and advertising should inform customers, not distract them. It should help their experience, not just deliver impressions. It should empower customers to be more decisive, not disrupt them.

“When these two factors are truly optimized, they help the customer find, discover, and buy, and that’s where we all win,” Lisa pointed out, “both as an e-Commerce platform, and as marketers.”

“As a technology company, we have 18 years of technology behind us, focused on customers and optimizing they’re experiences and helping them find, discover, and buy. We take all those great learning in the e-Commerce platform and apply them to the advertising program. Great advertising programs happen when we focus on the customers’ needs.”

And with that, Lisa began a tour of some of Amazon’s newest ad units – all of which merge takeaways from the consumer experience with classic ad models.

Amazon e-Commerce Ads

Amazon has spent the last few years taking the shopping features and functionalities their customers love on the retail side and integrating them to their advertising program. Such features include customer ratings and reviews, add-to-cart functionality, couponing, and so on — the goal being to ensure customers, when they interact with Amazon ads, have a seamless, convenient, and enhanced experience.

• Customer Ratings & Reviews: This ad unit merges a traditional product listing with a snippet review from a real customer, along with the X out of 5 star rating from that comment. According to Local Consumer (2012 survey), 72% of consumers trust customer reviews as much as they trust personal recommendations. Additional findings: Customer ratings and review ads realize consideration rates 20-30% higher than standard creative, i.e. customers who view ads embedded with ratings and reviews tend to go to the detail page from there to learn more about the product.
• Add-To-Cart: Lisa noted that most customers “love” to go to the product detail page, because it’s where they can learn rich info about a product of interest. It’s also where customers can add a product to their shopping cart. Taking that functionality and embedding it right in an e-Commerce ad yielded staggering statistics. Lisa noted that ads for products sold on Amazon that include a specific price generate up to 50% higher CTR and purchase rates than ads without the price. Booyah!
• Coupons: “Our customers love coupons, both online and offline.” Embedding $ of % off coupons directly in ads yielded an interesting stat: “46% of those who redeem a digital coupon were new consumers to the product or brand.” So consumers made the choice to buy from a brand from which they’ve never purchased before, perhaps, solely because a coupon was available in the advertisement. Fascinating.

Lisa’s team has also spent time testing e-Commerce combinations, in other words, ads that feature ratings and reviews as well as add-to-cart functionality. “CTR and consideration rates increase by almost 20%” in those cases, she noted.

Video Opportunities On Amazon

Lisa concluded with an overview of the video integration Amazon has begun to roll out across various ad units. Again, she noted there is huge opportunity here, citing a comScore stat that online retail shoppers are 64% more likely to buy after watching a video about a product. From beauty tips to how-to clips on consumer products, these tutorial videos encourage purchases, she states.

• Showcase Ads: “Customers who viewed ads with video were 20% more likely to purchase the product on Amazon,” Lisa stated. “We’re taking the great feature and functionality Amazon offers and we’re embedding it right in the ad.”
• Native Video: This is a new video ad unit Amazon just announced today (I believe). “Basically, what it is is it integrates search results in the video experience,” Lisa explained. “If I’m interested in a product, I can search on the product and a video is served up to me, so I can watch the video to learn more about the product…. We think there’s a huge opportunity with this experience because our customers are so interested in video and learning more about our products.” She confirmed that the e-Commerce platform is “starting with game trailers for now and expand into more categories over time.”

Lisa wrapped up her presentation by returning to the anecdote of her daughter… from four years old to forty and well beyond, people of all ages have the expectation of a seamless e-Commerce experience over devices, of how technology should help improve their shopping experience. “I just think there’s so much opportunity for us collectively to partner together for today’s generation and future generations,” she remarked, “so that advertising and e-Commerce always intersect at the customer.”

Stay tuned right here on Marketing Land for more full coverage from Advertising Week 2013!