Is Amazon pay to play? Our latest research with Analytic Index - Episode 261
INTERVIEW WITH MIKE KARLSVEN
DESCRIPTION
In today’s podcast, we are talking with Mike Karlsven, about the new report “In It To Win It - Is Amazon really pay to play?” which is a collaboration between Bobsled and Analytic Index. The report was launched just last week, and Kiri and Mike discuss the basis of the report, what they found out while doing the research, etc.
Make sure you tune in to find out more!
Mike Karlsven is a Co-founder of Analytic Index with a focus on Product, Insights, & Technology, and administration (finance, HR, and legal). Mike brings over 16 years of experience in product management, data analytics, and technology innovation in ecommerce. Prior to Analytic Index, Mike was a co-founder at One Click Retail which became Edge by Ascential and formerly worked at Walmart in Bentonville in their Information Systems Division. Mike is an avid snow skier and mountain biker and can often be found in the mountains all year round.
“A lot of times brands are shouting at their shoppers through their sponsorship activity, but are whispering to the algorithm with their content. They don’t have the same message between the two, and with Amazon, it’s all about the algorithm.”
KEY TAKEAWAYS
Bobsled and Analytic Index just launched a joint report called "In It To Win It: Why Amazon is pay-to-play". Looking at the relationship between Amazon advertising and organic search visibility, to what extent is Amazon pay-to-play? Kiri and Mike discuss the report which launched on October 6th, and what they learned from it.
There’s a lot at stake, and a lot of information is not necessarily balanced on either side, and the sellers are asking themselves if are they being treated fairly. Paying all the Amazon fees feels like Amazon is getting all the benefits. Is amazon getting an unfair advantage in this situation?
The Amazon tax and the reluctance of brands to pay, how different it is from other retail channels? There’s not a lot of difference in national trade vs ecommerce. We’re expecting instant gratification in the online world, but in the offline world, you don’t expect the same.
With Analytic Index’s data set they were able to base this research on over 4 billion data points, over 21.000 categories across Amazon’s product departments, tracking 349.000 keywords over 11 million items.
They wanted to answer a couple of questions. How much of "real estate" is taken up by sponsored slots vs organic? While doing the research, they discovered that out of 16 search result slots, only 4 were organic (for specific search results ‘coffee machine’). With only 4 organic search results having ‘earned’ placements on the search page, we get a valid question ‘for this particular keyword, how do I compete as an organic seller?’.
The research covers if this is a trend over all the categories and search results.
There are 4 different types of brands in this ‘matrix concept’ - the “sponsorship lift matrix” where we have ‘Organic winners’, ‘Pay to play’, ‘Free market’, and ‘Wasted spend’.
Kiri and Mike discuss how they created the matrix and what each of those types means. To see all the details you can download the report here.
They also cover how correlation varies by category, and what this means in a practical sense for brands say in the electronics category vs the grocery category.
Another thing that they noticed, is with brands that have high search visibility with less advertising than the average, tend to be the big brands that are advertising outside of Amazon big time. This goes to the point that these might be sophisticated brands with budgets but are not advertising on Amazon specifically. Nike, Adidas, etc. don’t have to spend as much on Amazon, but they are spending elsewhere. The shoppers know what they want and they’ve established themselves.
Kiri and Mike are open to talking to any brand that wants to find out where they sit in the matrix.
There are several more questions we answer and analyze in the report, other than the ones discussed in the podcast, to download the report and find out more, check out the links below.
MENTIONED IN THIS EPISODE
Connect with Kiri Masters
Learn more about Bobsled Marketing, an Acadia Company
Connect with Mike Karlsven
Learn more about Analytic Index
Download the In It To Win It report
