The advertising industry scrambles in wake of Amazon announcement

Within hours of the rumors, feasibility studies with regional support concluded that agencies need to start securing reseller relationships for the Amazon advertising unit and either build or resell the B2B technology that the market will eventually need

In the wake of market rumors on Wednesday last week that Amazon would include Pakistan in its list of countries accepted for seller registration, advertising agencies led by digital natives sprung into action to understand their sui generis for the impending business opportunity. 

It’s worth noting that as of 10th May 2021, Amazon has not actually added Pakistan to its list of countries accepted for seller registration, despite the Ministry of Commerce and hype train choosing to mislead the public as if it has. The only visible change is that Pakistan and the PKR have been added to the list of countries and currencies supported by Amazon for disbursement.

Nonetheless, this article covers how the $2 billion advertising industry is reacting.

Speaking with Profit, the chief investment officer (CIO) of a large media agency shared that talks had begun through regional headquarters for the company to secure a formal relationship with Amazon in order to resell its advertising services to advertisers in Pakistan.

As predicted by this scribe in 2017, the advertising business at Amazon has grown into a sizable contributor to the overall revenue of the technology company, with the latest quarterly filing showing that the business unit grew 77% year over year to make $6.9 billion. For context, this is seven times the revenue generated by Twitter from its advertising business during the same quarter.

During the earnings call, Amazon CFO Brian Olsavsky said the growth was driven by a large amount of website traffic along with improvements to advertisement relevancy and better products.

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“The advertising team has done a great job of turning clicks into productive sales,” said Olsavsky. “We’re using new deep learning models to show more relevant sponsored products, we continue to improve the relevancy of the ads being shown on the product detail pages and we’ve seen rapid adoption of the video creative format for sponsored brands, among other things.”

In the Pakistan market, most eCommerce sites offer advertisers and agencies the opportunity to place sponsored ads that direct website visitors to branded stores within the site or outside it, with digital media pricing favoring the former. As reported by Profit, since 2020 Daraz has redirecting large and small advertisers towards The Catalyst Act to lead performance marketing around special holidays or seasonal sales events, with 11/11 being the most recent example. 

Speaking to Profit, a spokesperson from Daraz said that The Catalyst Act is a business unit that functions independently and serves advertisers as a digital marketing agency. 

“We offer all marketing services,” said Saman Javed, founder of The Catalyst Act. “Be it performance marketing, search engine optimization, influencer marketing, creative production, storefront management, customer relationship management – everything that you need to run your online marketing channels.”

Advertisers that spoke to Profit said The Catalyst Act was pitched to them as a cross between an ad server, a digital agency, a retargeting solution, and a data aggregation platform. The arrangement is akin to the relationship between GroupM and Lazada, whereby the former has access to marketing assets of the latter. When advertisers and agencies route their digital campaigns on Daraz through The Catalyst Act, they gain preferential pricing.

Given the tremendous emphasis on product detail pages (PDP) and quality image photography on Amazon, Profit expects that services such as Brandverse will have a competitive advantage in the Pakistani market in providing images with speed and scale, cross-benefiting with listings on Chikoo.

“Our largest manufacturers know how to create products, they may even understanding branding, but the science of presentation and positioning on Amazon is very valuable now,” said Aisha Humera Moriani, Joint Secretary at the Ministry of Commerce & Textile. “If we use this opportunity to grow our exports, particularly those products that are made in Pakistan, that can be a success story for us.”

A 2020 survey from GroupM of over 200 marketers and 500 online shoppers concluded that the former group values the PDP for its important role in driving conversion. Nearly 45% of the consumer group indicated that they visited a PDP at the time of purchase while 41% of those said PDPs had the biggest influence on their purchase. As stated many times over by Brandverse founder Raza Matin, high-quality images lift trust which in turn increases the chances that a casual shopper will turn into a customer. 

“The detail page with rich content has a conversion that is 30% higher,” said Omer Gajial, the former general manager of category development for North America at Amazon during a webinar hosted by Shoaib Sarwar, the deputy consul general of Pakistan in Los Angeles. “Amazon has its own standards that photographed products will have a white background, standards on the types of claims that can be made, and video that will be attached to lift chances of conversion.”

Any business that competes on price as a means of luring customers is a commodity, whereas brands compete on value and the story they help customers tell themselves or others about themselves. Even if manufacturers in Pakistan learn to accept that they need to invest millions of dollars into brand development and an omnichannel presence, the Pakistan market itself is scarce in professional services firms that can help with doing so. 

At present, very few brand strategy consultancies operate in the Pakistan market, understandable due to the price-centric mindset around product commodification, hence the absence of high demand for the service. Leading brand marketers in Pakistan named a handful of service providers such as Z2C Limited, Penumbra, Designist, Madvertising, and KBW as being widely considered to be among the top ten full-service strategic brand consulting firms in the country.

As for Amazon, the CIO that spoke to Profit said that the newly minted in-house creative team was working hard to understand how branding works on Amazon, in order to offer platform-specific services to direct to consumer (D2C) advertisers that are interested in generating high-quality content – akin to the approach at Brandverse – and setting up brand identity aligned online stores.

The end goal here is to be the preferred reseller for the advertising inventory of the American technology business, collecting clients who would be interested in being discovered on Amazon by site visitors. The formats offered are posts that are feed-based shopping experiences, sponsored listing, and a host of additional online inventory listed on the Amazon demand-side platform (DSP).

“In preparation for the depreciation of the third-party cookie, we have been helping our clients build custom-segmented audiences, with which we can help them leverage the audience overlap report on Amazon to find audiences with attributes or behaviors similar to the audiences they have set up,” said the CIO that spoke with Profit. “This provides a pool of Amazon users who are likely to be relevant to our clients since they share attributes with current customers.” 

The source shared that a pitch deck was in the works explaining this to clients, which will detail how this method will exclude the advertisers’ existing CRM list, thereby leading to an entire campaign reaching partially qualified potential new customers.

Regional sales executives at Oracle and SAP confirmed to Profit that the inclusion of Pakistan in the Amazon reseller list has led to a greenlight for offering SaaS commerce solutions in the country, which are meant to offer prebuilt integrations and strong business user tooling. Following the consultative sales model, the executives shared that customers would be offered a product roadmap, delivery model, and an extensibility ecosystem.

D2C business decision-makers that spoke to Profit shared that they would prefer solutions that offer sales channel support, business intelligence analytics, and commerce management based on the experiences of using Magento by Adobe and Shopify, the latter of which has become a popular choice for Bonanza Satrangi and Super Sauda by Unilever. Sources from the Pakistan Software Houses Association shared that their members were in talks to secure market development funds from leading alternatives such as Salesforce, Episerver, and BigCommerce.

“Locally created headless commerce solutions are below par in promotions and product configuration,” said an executive with an Oracle gold software house. “They lack intuitive business user tooling and workflows and while the design of the business user tooling is familiar to coders, it is, unfortunately, foreign to merchandisers who need to work with agility to respond to shifts in market tastes.”

The inclusion in the reseller list has technology executives believing that branded manufacturers will be using eCommerce solutions to sell to both D2C and wholesale to retail partners (B2B2C), for which sources shared that the market needs to step up and create an above-par functionality in business intelligence, personalization, and product configuration, that is on par with other vendors for promotions and order management. 

“We believe that mid-market manufacturing and wholesale companies will eventually have no choice but to use a headless commerce solution to keep up with the real-time flow of demand if an unprecedented amount of businesses start using Amazon,” said an executive. “The market will need to keep up with sophisticated foreign solutions of trying its hand with bSecure and Brandverse instead. Speed is everything.”

Babar Khan Javed
Babar Khan Javed covers the advertising industry and marketing function in Pakistan for Profit. He can be reached on [email protected] with details about media, creative, and digital briefs, future projects, management changes, client wins or losses, and everything in between.

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