In case you haven’t heard, Amazon recently began testing a new type of mobile popup ad, one that should concern any brand or retailer selling at its marketplace.
The ads work like this: When a shopper visits a brand’s sales listing or sponsored page on the Amazon mobile app, if Amazon itself has a lower-priced alternative in its AmazonBasics line, the company will serve a popup ad to steer that customer to buy it.
Even more troubling, these ads are designed to require customer action. They cannot be ignored. If a consumer visiting the listing page of your HDMI cable, for example, encounters a popup ad for a less-expensive AmazonBasics alternative, that customer will have only two choices: Click a button to close the ad, or click a different button to purchase the AmazonBasics product.
If this test proves successful for Amazon, and the company decides to roll out these ads for all of the nearly 20 AmazonBasics product categories (furniture, computer accessories, outdoor, automotive, pet supplies, etc.), your brand and your retail partners could find yourselves competing directly against Amazon’s own retail business—and on their platform!
Many of the initial reports about this mobile ad test have focused on questions of fairness. How can Amazon steer consumers away from its own marketplace’s listings and undermine its retail and brand partners? Will sellers fight back against the practice?
Other industry discussions focus on the troubles the strategy could create for Amazon itself. Won’t this put the company’s ad-sales operation (Amazon is now the third-largest digital ad platform) in direct conflict with the AmazonBasics retail division, which will be undermining its third-party advertisers?
2 Big Risks of Amazon’s New Mobile Ad Strategy, and How Your Brand Can Address Both
Those are all interesting questions. But at TrackStreet, we’re focused only on how this could affect your brand. The way we see it, if this AmazonBasics ad campaign (or something similar) becomes widespread, it could have a real impact on your company’s bottom line.
But you can address these risks—quickly, painlessly, and cost-effectively. Here’s our take.
1. These Amazon ads could pressure sellers to violate your MAP policy.
Imagine your retail partners discover that visitors to their listing pages or ads are being interrupted with AmazonBasics promos for cheaper alternatives. Worse, imagine the prices of the private-label Amazon products are less than your MAP pricing levels.
Some of these retailers might be tempted to drop their prices below your MAP guidelines to compete with Amazon. Even if they’ve never violated your policy before, when these sellers realize they’re up against Amazon itself, they might not see any choice.
What to do about it:
This means you have yet another reason to step up your MAP monitoring and enforcement strategy. That way, you’ll be the first to know if there are violations. And if you don’t have a MAP policy in place, or a system for policing it, you definitely need one ASAP. Particularly for products in your line that must be protected, such as your brand’s “crown jewels.” Plus, using a solution like TrackStreet’s Market Visibility module for monitoring pricing trends over time on your key products, can help you know when things are shifting.
2. Because cheaper Amazon alternatives will be more visible, any damage to your brand could cost you more customers.
If Amazon is regularly reminding shoppers that it makes products similar to yours, and selling them for less, any missteps that harm your brand could become costlier than ever to your business’s bottom line. If customers view you as a commodity company, as opposed to a unique brand they know and trust, they will have no trouble abandoning your products for cheaper alternatives from Amazon.
What to do about it:
This means you need to be more vigilant about safeguarding your brand’s value from the many threats it faces online. You’ll need to be more aggressive in keeping your resale circle tight and controlled, for example, by implementing an authorized dealer program and inviting only retailers that have stellar reputations. You’ll need to be on the lookout for unauthorized 3Ps creating lousy buying experiences with your products. You’ll also need to be more strategic about monitoring the Internet for customer reviews—and responding quickly, publicly, and professionally to negative ones.
Brand value may be one of your company’s most important assets, so protecting and growing it should be a key priority. If you need to evaluate your brand and how it is performing online and want help crafting your strategy, we can help.