retail news in context, analysis with attitude

Reuters reports that Amazon.com “is trying to grab some of the billions of advertising dollars spent each year by consumer packaged goods companies including Kimberly-Clark Corp, as the world's largest Internet retailer seeks new sources of revenue growth.”

According to the story, “US CPG industry online ad spending will approach $5 billion by 2015, double last year's level, according to estimates by eMarketer, an Internet market research firm ... Amazon began selling ads for other companies on its websites about six years ago and now runs campaigns that also appear on its Kindle devices. The effort has picked up steam in the last year, putting the company in closer competition with online ad leader Google Inc.”

In a speech this week, Lisa Utzschneider, vice president of global advertising sales at Amazon, talked about how CPG advertising is a “huge opportunity” for the company , and the story lays out one example:

“Amazon recently ran an ad campaign for Kimberly-Clark diapers called Huggies Slip-ons that ran across Amazon websites and its Kindle devices. Amazon included an offer in some of the ads for $2 off plus a 20 percent discount on Amazon's subscribe-and-save program. Amazon also embedded customer reviews in some of the ads, Utzschneider explained.

“The ads made consumers 30 times more likely to find out more about the diapers and 13 times more likely to buy them, she said.

“The ads that ran on mobile devices helped double sales of Huggies Slip-ons via such devices during the campaign, she added.”
KC's View:
Here’s why Amazon may be able to make real headway in this area - as the story says, “The key is being able to use massive amounts of personalized shopping data to better target ads.”

I firmly believe that the ability to target customers through a comprehensive and intimate knowledge of who they are and what they buy will be the defining differential advantage of the coming decade and beyond. And one, by the way, where Amazon has a real head-start.