Ecommerce Marketing / Ecommerce News

Amazon Shutters High-Performing Product Ads Platform; SMBs Look to Restrategize Multichannel Efforts

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Online marketplaces continue to dominate the online shopping industry. Just look at how Amazon pulled off a Christmas in July-like flash sale the company called Prime Day.

Consumers complained that Amazon’s Prime Day didn’t offer enough quality produamacts — but the data showed that they still purchased, and at a higher rate than they did during Black Friday 2014.

Indeed, it seems like Amazon can do no wrong in the customer’s eye, but that isn’t so true for SMBs. After all, it was Amazon’s free and one day shipping on their Prime platform that forced the entire ecommerce industry to squeeze their margins or up their prices in order to use shipping as a marketing tactic to close conversions. Now, almost all online businesses offer free and/or one-day shipping, or are planning to do so in the near future.

The success of Amazon in this way has also spurred similar competitors, like Jet.com or even Facebook, the social media site that now offers on-platform shopping which functions near identically to Amazon’s own. In other words, Amazon and Facebook both keep transactional customer data, making it difficult for brands utilizing those outlets to properly personalize branded marketing efforts based on consumer browsing and purchasing habits. Overall, the inability to do so reduces customer lifetime value for SMBs.

In fact, the rising dominance of social commerce players like Facebook is what spurred BigCommerce’s own product ads platform, which optimizes Facebook ads for brands in order to produce the highest ROI. These ads send customers back to your site, where they can browse, purchase and experience your brand in a controlled environment. Plus, you get to keep the transactional data when that sale occurs.

For years, Amazon has offered a similar solution on their own platform. Online businesses could advertise products on Amazon, without necessarily selling on the marketplace. These targeted advertisements would send traffic back to a business’s site, allowing the brand to control the customer experience outside of Amazon.

This week, however, Amazon alerted those utilizing this advertising outlet that they will be permanently shuttering the department in October.

“We are disappointed with the news,” Angela Hsu, vice president of ecommerce and marketing at Lamps Plus, a home decor company that used the product ads program, told VentureBeat. The company was featured in an Amazon case study in May and said the program increased its sales by more than 80%.

In that same vein, a recent ChannelAdvisor survey found that 35% of respondents said Amazon Product Ads and Sponsored Links were the digital marketing channel that offered the best return on investment.

“Our customers performed really well with [Amazon’s product ads] because it provided a middle ground of being able to partner with Amazon but also not allowing them to see all their transaction data,” said Scot Wingo, the executive chairman of ChannelAdvisor, which helps retailers and manufacturers sell in a multichannel environment.

The shuttering of the product ads program on Amazon isn’t likely due to a revenue issue. Amazon’s overall advertising business could bring in $1.26 billion in 2015 worldwide and grow to $1.83 billion by 2018, according to estimates from eMarketer, which tracks online advertising. Instead, the move is likely driven by a need to be platform specific in order to build customer data troves, an increasing necessity among all online sellers — even the marketplace behemoths.

Martin McNulty, CEO of digital marketing agency Forward3D, told Business Insider that Amazon’s move also indicates how the site is becoming as much a web portal as it is an online retailer. In other words, Amazon is becoming more like Facebook, and vice versa.

“Portals have historically looked to monetize traffic in any way they could — and selling advertising was usually key. For Amazon it was logical: if they don’t have a product [listed on the site,] then why not sell traffic to someone that does? What’s changed for Amazon is that its range of products is growing wider, and so today, the chances of them stocking or selling via a partner is far higher. Why dedicate real estate to ads that might earn a dime when you could instead drive to a product that could help you earn dollars in profit?”

While the move might make sense for Amazon’s business strategy, for online retailers looking to build brand awareness and push customers back to their owned and operated sites, the shuttering of product ads is yet another wrench in the wheels of multichannel success. Marketplace and social commerce sales are vital to SMBs, but only insofar as they can continue to cultivate a loyal audience who purchases through the site. The key here is customer data ownership, and SMBs need just as much of it as Amazon and Facebook in order to holistically understand their audiences and ramp up their marketing efforts to drive both customer lifetime value and net new consumers.

For SMBs on the BigCommerce platform, BigCommerce analytics are now available to all customers at no additional cost to help provide the detailed reporting necessary to scale online businesses. The product ads platform is also available to U.S. customers, and will be open to international customers as soon as possible.

Learn everything you need to know about selling on Amazon with our complete guide, featuring contributions from industry experts.

Photo: FlickrCourtney Boyd Myers

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