Every brand today is in some way competing with the same black-and-orange behemoth: Amazon. This is especially true in the retail industry, which Amazon has completely transformed over the last two decades. While Amazon is known for its low prices and impressive shipping capabilities, they also provide some of the most fierce marketing competition.
In 2020, Amazon will spend more than $22 billion on marketing, and 197 million people will shop on their platform each month. Amazon is a formidable competitor for almost any business, thanks to its resources and direct relationship with a monthly customer base the size of Russia. Keep in mind that if you invest in digital marketing channels such as display ads, paid search, and other input-driven models, you could be competing with a Goliath who can outspend you exponentially for the same target customer.
The size of Amazon’s marketing apparatus creates a bit of a quandary because of its high customer loyalty. Even the most successful businesses cannot outspend Amazon in traditional marketing channels or erode their market share in this way. If they sell through Amazon, on the other hand, they will be in direct competition with other brands, including possibly Amazon itself.
Furthermore, when a brand is able to sell effectively on Amazon, the customer frequently becomes Amazon’s customer rather than their own.
To compete with goliaths like Amazon, brands must be strategic about their marketing strategies. They can’t just rely on paid search, social media ads, or display ads. This is where the concept of partnership marketing comes into play.
Partnership marketing is a fast-growing channel in which brands rely on transparent, trusting relationships with marketing partners and only pay for the results they get. In contrast to channels that charge upfront fees for uncertain returns, partnership marketing allows brands to pay only after they’ve secured sales, leads, traffic, and other outcomes.
This channel isn’t new; it’s been around for a long time and has taken many forms, the most effective of which is affiliate marketing. It’s a profitable, scalable, and long-term alternative to today’s dominant channels, and every marketing executive should be aware of it.
The Amazon Associates program, which is estimated to have more than one million affiliate partners, is almost certainly the world’s largest affiliate marketing program. Despite this, Amazon’s strength—its sheer scale—presents an opportunity for smaller brands in partnership marketing.
First, Amazon must, understandably, rely on widespread automation due to the program’s size. As a result, the vast majority of the program’s publishers will not have a direct relationship with an Amazon employee. Smaller brands can fill the void in areas where personalization and a human connection are important, especially since many partners want more than just dollars from the programs they join. These brands can work with partners more closely than Amazon, providing specific ways to improve performance, more relevant content to entice audience members and potential access to offers and exclusive opportunities that would not be available otherwise.
Second, when Amazon changes its affiliate program strategy, it has a significant impact. When Amazon was faced with more demand than it could fulfill early in the COVID-19 pandemic, it made major changes to its program, changing its commission structure and removing large publishers. While these decisions are understandable for a program of Amazon’s size, they can be disruptive to partners, particularly those who have not diversified their partnerships. Many brands took advantage of the opportunity to reach out to new publishers who had never worked directly with them before, resulting in a significant increase in the growth of their partnership programs —Due to the new relationships formed, growth largely continued even after Amazon reversed some of its commission changes.
Finally, partnership marketing may be influencing how Amazon views its partnership programme for third-party sellers on its platform. Amazon is currently testing an initiative to open its attribution pixel, which will allow transactions sent by publishers in outside partnership marketing programmes to be tracked and reported through to conversion for the first time, as of the writing of this book. This means that brands selling on Amazon may be able to set up their own partnership programmes on the platform, in which they own and manage their relationships with publishers. Brands pay the commissions and have a say in how these publishers market their products.
Because they generate the majority of the revenue in a transaction, Amazon and other marketplaces such as Apple and Walmart should be very willing to stand aside and let brands absorb the direct costs of partnership marketing for their own products. This change would give smaller and midsize brands access to Amazon and other marketplace platforms, allowing them to work more closely with publishers who promote their products.
It’s preferable to compete with Amazon in a game where your company has a lower structural disadvantage. Any brand can build long-term marketing ROI and outmanoeuvre the goliaths in their verticals by leveraging scalable, outcome-based marketing partnerships.
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