To answer that complicated question, one can’t ignore the ecommerce giant’s advertising business.
Fueled by the fact that over half of consumers now turn to Amazon first for product-related searches, brands are increasingly allocating dollars to Amazon ads. And while they are still most often focused on performance campaigns, brands like L’Oreal are exploring the ways they can use Amazon ads to target consumers in multiple parts of the funnel.
One of the newest ways brands can make themselves more appealing to consumers on Amazon is to pay the company for Premium product pages. As detailed by AdAge, this feature allow brands to enhance their product pages on Amazon with wide-screen videos and interactive, multimedia displays – “but they have to pay for the souped-up features.”
The cost? For $500,000 per year, brands are said to be able to enhance pages for all of the products they sell on Amazon.
According to AdAge, one of the first brands to take advantage of this new offering is Bose, which has added videos and interactive comparison guides to some of its product pages, helping them stand out against products from competitors.
Are Amazon’s ad offerings the new slotting fees?
In theory, Amazon, unlike a brick-and-mortar store, has virtually no constraints on the number of products it can offer. But even if Amazon theoretically has unlimited shelf space, being on Amazon and successfully selling on Amazon are two different things.
Standing out isn’t easy for brands.
Historically, many supermarkets, as well as retailers like bookstores, have charged ‘slotting fees’ which are essentially a pay-for-shelf space arrangement. Slotting fees have been controversial, for obvious reasons, and are banned in some places, but there is a reasonable argument to be made that because brick-and-mortar stores have limited shelf space, it’s fair for their operators to maximize the value of shelf space by charging brands to make sure their products are on it.
On Amazon, shelf space isn’t limited, but attention is, and it’s worth considering that Amazon’s growing suite of ad offerings, which are designed to help brands attract customers to their virtual shelf space in the world’s largest online marketplace, are effectively allowing Amazon to build a new kind of slotting fee-like model that will dwarf the one supermarkets have employed.
As Evan Hanlon, VP of strategy and platforms at agency GroupM, told AdAge, “The industry talks a lot about virtual shelf space. They have to make sure to optimize that presence like they would at any grocery store or retailer. People have to take that deathly seriously now at Amazon.”
Brands that don’t might discover that even though they have shelf space on Amazon, it will be increasingly difficult for shoppers to find it.