January 9, 2019
Axios reported on January 8 that online retail giant Amazon has a “stealth pilot” in progress—testing whether consumer brands such as Maybelline and Folgers can pique consumer interest by sending out free samples.
The brands pay Amazon to ship out their complimentary goodies, based on what the popular website already knows its frequent customers are most likely to buy.
Everyone likes a freebie—and by using samples as “targeted ads,” Amazon is playing on its major strength as a trusted delivery service of everyday goods, Axios said. What’s more, this is a new gambit that Amazon is betting its biggest competitors—Google and Facebook— cannot duplicate.
Indeed, the Seattle-based tech giant has the purchasing data and logistics infrastructure to offer samples of actual products, whereas Facebook and Google currently can only offer display ads or search ads, respectively, for certain kinds of consumer packaged goods brands.
To date, Amazon, itself, has made most of its roughly $5 billion in ad revenue through its own display ads. But the company now says that marrying old-school samples with its customer data will provide brands “a higher likelihood of conversion than display ads,” according to a summer job posting.
With 100 million subscribers to its Prime services alone, Amazon certainly has the numbers and the established long-term relationships with customers who purchase goods regularly, to make this strategy work, Axios pointed out.
“Having this huge installed base of users, or really Prime subscribers, and putting something in the box that people will have a high proclivity for liking — that seems like a brilliant Amazon strategy,” Rich Greenfield, a managing director and media analyst at BTIG Research, told the news outlet.
Samples of new products are sent to customers selected using machine learning based on Amazon’s data about consumer habits, according to recent job postings and details listed on its site.
Right now, Amazon is keeping the pilot project under wraps among its other advertisers, but its legal terms for advertisers include details about how its sample program functions. “No later than the date specified by Amazon, Advertiser will deliver to Amazon at the location(s) designated by Amazon and at Advertiser’s expense, all Samples to be delivered or distributed by Amazon,” the terms say.
Most analysts are bullish on the program, Axios reports. However, there could be privacy concerns.
“Amazon sent me a random coffee sample!” said one Twitter user in August. “Is it because I have like 15 [different] types of coffee in my cart?” A package pictured in the tweet included both Amazon and Folgers branding, and a link to a website devoted to the new coffee offering.
On its website, Amazon promises that privacy conscious consumers will have the option to opt out. But will confidentiality win out over avid consumption? Stay tuned.
Research contact: @rebeccazisser