Opinion

Amazon is building a marketing ecosystem, but ‘brand stories’ belong to agencies

While the tech giant is expanding its tentacles beyond e-commerce to build strong advertising revenue, the threat to agencies has been overplayed as brand stories cannot be created on data alone – writes Chan Ming-Ti of The Clan

With the recent success of Amazon Marketing Services, the firm recording higher than expected returns for their advertising efforts, we have seen the growing power and influence that Amazon has over brands.

The firm’s arsenal of sponsored products, headline search ads and product display ads are delivering effective results that are measurable through its vast amount of consumer data. And although Amazon is a relatively new player within the advertising space, these results cannot be ignored by the industry.

In fact, many believe that Amazon is the future of digital advertising. So will it really replace creative and media agencies in delivering effective results for brands? While, some might argue the point for this scenario, my view is that this may not necessarily be the case.

There are two key challenges that the company will encounter. First of all, history has shown us that brand owners and agencies are quick to see the value in an advertising channel that can generate high returns, which will lead to that channel being distorted by the influx of advertising investment.

A case in point being the overzealous social media influencers and key opinion leaders that are seen peddling sponsored wares everywhere. Their influence and appeal is slowly waning even among their most loyal followers.

Meanwhile, platforms such as Instagram and Facebook have been implementing more and more ways for advertisers to reach audiences – rather than focusing on delivering features that truly connect people. This disruption has had adverse effects for the ad industry. Will Amazon do the same?

Well, at the moment the variety of advertising functions on Amazon are pretty limited. But it doesn’t take much to imagine a world where your screen, mobile and desktop are filled with a variety of Amazon-based advertising formats, subtly disguised as a ‘reminder’ to help you find the product you want.

For Amazon, the aim surely will be to spread this tactic beyond the app and website to Amazon Alexa and Amazon Prime. Which brings me to point number two. With the recent Cambridge Analytica scandal that has compromised consumer data, platforms will surely be subjected to even more scrutiny by regulators and consumers.

There is momentum for them to be accountable for the databases that they hoard. So Amazon too will need to be more open on how they access and market their customers’ data for brands, in order to be aligned with the shifting consumer mindset of today

For the public is no longer ignorant towards how their digital data is being used – or abused – by brands. People are certainly wanting and demanding greater transparency. However, there is a great prize that awaits Amazon if it succeeds in balancing the commercial needs of brands and the product needs of consumers.

The company is poised to create an ecosystem that could deliver a highly-focused digital shopping experience that effectively uses both brand needs and consumer data, in order to match consumers with the products of their needs. In short, the perfect marketplace.

Amazon is actually setting the stage for many different digital marketplaces, allowing a more efficient use of their platforms to generate revenue that compliments each one. Especially among the large population of busy professionals here in Malaysia, where more and more consumers are familiarising themselves with e-commerce due to its strong offering of convenience and the variety of products available at ridiculously low prices.

So when, not if, Amazon reaches this state of being how can creative and media agencies stay relevant? Let’s frame it this way. Amazon is just another part of the growing challenges that the advertising industry is facing currently. With consultancies moving into the space and clients wanting business solutions rather than creative ideas, the list of challenges continues to grow.

Rather than viewing this as a threat, agencies must find a way to optimise Amazon as an opportunity. Amazon is an effective digital touchpoint for consumers to visit and purchase products, but it lack the capabilities for a brand to achieve an emotional connection with consumers.

That requires agencies. They deliver clients brand strategies that not only tackle key challenges like driving purchases, but also can help brands connect with consumers on a deeper level. For example, Amazon can connect me with a pair of Nike sneakers based upon price, location, size and model. However, it cannot connect me with Nike’s brand values and beliefs.

Ronaldo is a marketer’s dream

Imagine getting a pair without realising that Cristiano Ronaldo and Michael Jordan share the same brand as you. Consumers will miss out on a large part of what makes Nike special and why it is individually valuable to consumers. Although, this only works when brands make quality products that are innovative and relatable.

Agencies can build this deep-seated connection through a variety of integrated marketing tools and platforms. That is how you build a brand. Amazon is a useful touchpoint to convert consumers as part of a larger strategy, but it can never be the defining pillar of a strategy.

Just because consumers are there searching for your brand doesn’t mean the deeper answer lies in the place where they are searching. Finding the brand message and equity requires more in-depth research and analysis into audiences.

That is the way you find that critical insight, which enables you to build a larger strategy that Amazon may or may not be a part of. In a nutshell, while Amazon continues to grow its far-reaching network in terms of every aspect of the consumers’ lives, brand stories will always be at the starting point of every buying journey.

Chan Ming-Ti

Chan Ming-Ti is a strategic planner at The Clan, an independent agency based in Malaysia

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