Online sales on Black Friday set a record with over $9 billion. eCommerce is still doing very well, but Amazon, the leader, is challenged as they continue to make more money from advertisers than from selling products.
(Washington Post) When you search for a product on Amazon, you may not realize that most of what you see at first is advertising. Amazon is betraying your trust in its results to make an extra buck. The first page of Amazon results includes an average of about nine sponsored listings, according to a study of 70 search terms conducted in 2020 and 2021 by data firm Profitero. That was twice as many ads as Walmart displayed and four times as many as Target.
Amazon might feel unbeatable for service, fast shipping, and easy returns. But as a place to find products, it’s becoming a tacky strip mall filled with neon signs pointing you in all the wrong directions.
One of the internet’s great promises is that we can access more information and make better choices. Amazon has pioneered an online advertising business that feeds us sponsored information that can cloud our choices. We, the users, want honest online shopping experiences and common-sense limits on ads designed to deceive.
I call it the “shill results” business. Even when they contain a tiny disclaimer label — as do Amazon’s — these ads can be misleading because they fill up spaces people have every reason to expect to contain trustworthy, independent information.
Worse, many other apps and online marketplaces follow Amazon’s lead. Shill results now crowd Apple and Google’s smartphone app stores — search for an app used for couple’s therapy, and you’ll get an ad for a dating app. (Seriously.) Food-delivery apps shill eggnog and whipped cream when you’re just looking for milk.
After selling $31 billion in ads last year, Amazon became the third-largest online ad company in the United States, trailing only Google and Facebook. Some brands and sellers love Amazon ads because they show up right when you’re making a purchase — though others tell me ads have become an extra Amazon tax they must pass on to customers.
Advertising isn’t necessarily bad. When done well, ads can inform us about new products and help new businesses reach the door. It pays the bills for much of the internet.
An Amazon study found 89 percent of U.S. customers are pleased with the results pages. I invite them to run the survey again after showing customers their results with all my orange highlights on the ads. Amazon’s focus has shifted from “trying to find ways to delight consumers with great recommendations, personalization, and discovery to building better advertising technology.
Google and Facebook are chock full of ads, too. But on Amazon, we’re supposed to be the customers, not the eyeballs for sale. We’re paying Amazon to buy a product and probably paying for a membership in its Prime two-day shipping product.
In addition, Amazon systematically listed products from its private labels and exclusive brands higher in search results than competitors, with better customer ratings and indicators of higher sales. This investigation found that knowing whether a product was from an Amazon brand or sold exclusively on Amazon could predict whether Amazon would list it at the top of search results about 70 percent of the time.
Amazon is the leader in eCommerce, but should they be more forthcoming in identifying advertising? Consumers likely don’t know, but as Amazon becomes more of an online merchant, they are losing focus on what made them great.