Amazon is apparently beta-testing a new advertising strategy that leverages its logistics and delivery expertise with its massive treasure trove of consumer data.
A report in Axios says Amazon has teamed up with advertisers Maybelline and Folgers to send free samples to users with a predilection for purchasing their products. Analyzing data using AI, Amazon believes it can predict which consumers are more likely to buy certain products.
They already use the technology with their popular recommendation engine to serve up related products when you search. These efforts have been hugely profitable for Amazon. The company said in mid-2018 that purchases from the recommendation engine made up as much as 35% of total sales.
It’s another effort by Amazon to cut into the online advertising dominance of Google and Facebook. So dominant are the pair that they have been dubbed “Goobook” and often referred to as one. While their combined market share dipped slightly in 2018, the duo still account for nearly 58 percent of all U.S. digital ad dollars. Amazon has grown over the past year but still accounts for less than 5% of digital ad spend.
Combining its data targeting with its delivery chain, Amazon believes it can provide an advertising option that’s not available with Facebook or Google. It may also be cheaper and more targeted than direct mail because of precise targeting.