Amazon just made a(nother) serious move.
Certain news hits the cycle and it gets goggled up, dismissed or never rises to the top of the heap. In this case, Amazon broke some major marketing-powered news that got ignored in the face of CES, and Jeff Bezos’ divorce announcement (read: Amazon’s new ad strategy: Free samples based on what it knows about you via Axios). Still, it’s worthy of your attention, and it should be (another) wake-up to companies about what happens when a retailer knows more about its customers than the brands do. About ten days ago, news broke that Amazon has been quietly piloting an adverting scheme where it sends consumers free samples. What might seem like another innocuous sampling program to some, is a major leap forward – on many fronts – if you care to scratch beneath the surface.
It’s really more than sampling.
In traditional sampling, a brand sets up a temporary shop somewhere. It could be at a busy intersection, within a big box store, through asking (via online ads) if a consumer would like to try something, to a pop-up shop. The vast majority of sampling is given to anonymous people. The free samples are passed out in the hopes that a consumer tries it and buys it on the spot, or takes it away and then purchases the brand product at some point in the future. What makes Amazon’s program unique (and scary) is that it’s leveraging their exiting consumer data to target consumers that have a higher likelihood of buying the brand. Using data, algorithms and, yes, machine learning, coupled with their Amazon Prime service (which has over 100 million subscribers), Amazon knows what you’ve bought, searched for, clicked on and more.
Next generation advertising.
Strategically, this could be a true contender to the Google and Facebook advertising duopoly. Facebook and Google can’t battle Amazon on this front. Consumers already trust Amazon for everything (including everyday goods), so this sample strategy (if packed, promoted and scripted well) will always be seen as a “surprise and delight” moment as consumers open up their packages. This marriage of traditional sampling coupled with Amazon’s data and consumer relationship is what makes it so interesting, and a modern twist on sampling. As Amazon looks to sell more consumer packaged goods products (be it the major brands or their own private label), a program like this could also provide fascinating data back to Amazon (did people actually order the brand after a sample was sent to them?).
Love this or hate it?
The four issues with Amazon’s sampling strategy is:
- Will consumers love this or be turned off by receiving goods they never ordered?
- Will consumers feel like their privacy and data is being invaded, if they suddenly start getting samples from things they already ordered (but from different brands)?
- Will they feel even more creeped out if the algorithms are right, and they start getting samples of products they’ve only thought about/never ordered?
- Will consumers be notified that they’re in this sampling program, and can they opt out?
In a world where Amazon is currently the third biggest digital ad platform (at 4.15% in 2018 – Google was at 37.14% and Facebook was at 20.57% of the total market), bringing in close to five billion dollars (which is still eye-poppingly large, and much bigger than most analysts expected), the four issues above will probably only affect a very small percentage of their consumer base and – on the other hand – it will create a very powerful advertising engine that their competitors won’t be able to compete against. Think of this an advertising moat.
Once again, Amazon could be on to something huge and truly valuable/interesting to their consumers.
Agreed, Amazon is on to something. I predict (why not) they’ll double their share of the advertising pie this year. In North America. Elsewhere its another story. They might even be in Facebook territory in 2 years.
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